[00:00.00]Listen to part of a lecture in a business management class.
[00:03.83]Professor: OK, uh, let's talk about organization and structure in a company. [00:08.95]How are companies typically structured?
[00:11.68]Female Student: Functionally.
[00:12.72]Professor: And …？
[00:14.06]Female Student: By projects.
[00:15.55]Professor: Right. By function ... and by projects. [00:18.32]Twenty years ago companies were organized in function groups, where people with a certain expertise worked together as a unit- the, uh, architects in one unit, the finance people in another unit. [00:29.77]Well, nowadays a lot of companies are organized around projects-like a construction company could be building an office building in one city and an apartment house somewhere else, and each project has its own architects and engineers.
[00:45.15]Now, the good thing about project organization is that it’s easier to change to adapt to the needs of the project-it’s a small group, a dedicated team, not the whole company. [00:56.40]Now, with that in mind, here's a question for you: why do we continue to organize ourselves by function, even now, when in fact we admit that projects are the lifeblood of a lot of organizations? [01:09.51]Why do some companies maintain a functional organization instead of organizing around projects? Yes?
[01:16.45]Female Student: Because, um, if you don’t have that functional structure within your organization, chances are you'd have a harder time meeting the goals of the projects.
[01:25.93]Professor: Why?
[01:26.84]Female Student: Why?
[01:28.09]Professor: Listen, let’s say we got four new cars we want to design. [01:32.57]Why do we need a functional organization? [01:35.20]Why not just organize the company around the four projects-these people make car number one, these other people make car number two...
[01:43.73]Female Student: Yeah, but who’s gonna be responsible for what? [01:46.00]You know, the way you tell who's …
[01:46.59]Professor: Well …well, we’ll appoint a manager: new car number one manager, car number two manager they’re completely responsible. [01:55.64]Why should we have a single engineering department that has all four cars passing through it?
[02:01.87]Female Student: When you design a car, you need the expertise of all the engineers in the company. [02:06.88]Each engineer needs to be in touch with the entire engineering department.
[02:11.39]Professor: Yeah, but I keep ... I keep asking why. [02:14.94]I wanna know why. Yes.
[02:18.16]Male Student: Well, to eliminate redundancy's probably one of the biggest factors in an organization. [02:24.21]So that, uh... so that there’s, there’s …standards of... for uniformity and efficiency in the organization.
[02:32.43]Professor: OK. [02:34.08]And ... and that's probably the primary reason for functional organization right there-is that we want some engineering consistency. [02:42.08]We want the same kind of technology used in all four cars. [02:46.64]If we disperse those four engineers into four parts of the organization and they work by themselves, there's a lot less chance that the technology's gonna be the same from car to car. [02:57.00]So instead we maintain the functional organization - that means the engineers work together in one part of the building. [03:04.58]And their offices are next to each other because we want them to talk to each other. [03:08.82]When an engineer works on a project, they bring the expertise of their whole functional group with them.
[03:15.84]But there's a downside of that, though, isn’t there? [03:19.12]I mean organizing a company into functional groups is not all positive. [03:23.91]Where's the allegiance of those engineers? [03:26.60]It's to their coordinator, right? [03:28.64]It's to that chief engineer. [03:30.67]But we really want our one engineer, the engineer that's working on car number one, we want that person‘s loyalty to be to that project as well as to the head of the engineering group. [03:41.48]We ... we really want both, don’t we? [03:43.82]We want to maintain the functional organization, so we can maintain uniformity and technology transfer, and expertise. [03:51.82]We want the cutting-edge expertise in every group. [03:55.07]But at the same time we also want the engineer to be totally dedicated to the needs of the project. [04:00.40]Ideally, we have a ... a hybrid, a combination of both functional and project organization.
[04:08.64]But there's a problem with this kind of hybrid structure. [04:12.05]When you have both functional and project organization, well, what does that violate in terms of basic management principles?
[04:20.37]Female Student: Unity of command.
[04:21.89]Professor: Unity of command, that's exactly right. [04:24.63]So this ... this is a vicious violation of unity of command, isn't it? [04:29.77]It says that this engineer working on a project seems to have two bosses. [04:35.15]We ... we got the engineering boss, and we got the project manager boss. [04:40.09]But the project manager is responsible for the project, and is not the official manager of the engineer who works on the project. [04:48.56]And we try to maintain peace in the organizations, and sometimes it’s disrupted and we have conflicts, don't we? [04:55.89]The project manager for car one wants a car part to fit in a particular way, for a specific situation, a specialized case. [05:04.40]Well, the, uh, engineering director says no, we gotta have standardization. [05:10.79]We gotta have all the cars done this way. [05:13.28]We can't make a special mold for that particular part for that particular car. [05:17.99]We're not gonna do that. [05:19.82]So we got a conflict.
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