Strategy in Action 12: Organising for Success

Learning Outcomes (1) Identify key challenges in organising for success, including ensuring control, managing knowledge, coping with change and responding to internationalisation Analyse structural types of organisations in terms of strengths and weaknesses Recognise how important organisational processes need to be designed to fit their circumstances 12-2

Learning Outcomes (2) Appreciate how internal and external relationships can integrate knowledge and resources within and between organisations Recognise how the three stands of structure, processes and relationships should reinforce each other in organisational configurations and the managerial dilemmas involved 12-3

What is Configuration? An organisation’s configuration consists of the structures, processes and relationships through which the organisation operates. 12-4

Exhibit 12.1 Organisational Configurations 12-5

Key Challenges for Organisations The speed of change and the increased levels of uncertainty The importance of knowledge creation and knowledge sharing The rise of internationalisation 12-6

Structural Types Functional Multidivisional Matrix Transnational Project-based 12-7

Exhibit 12.2 A Functional Structure 12-8

Functional Structures Advantages CEO in touch with all operations Reduces/simplifies control mechanisms Clear definition of responsibilities Specialists at senior and middle management Disadvantages Overburdened with routine issues Neglect strategic issues Difficulty coping with diversity Coordination between functions Failure to adapt 12-9

Exhibit 12.3 A Multidivisional Structure 12-10

Multidivisional Structures Advantages Flexible Control by performance Ownership of strategy Specialisation of competences Training in strategic view Disadvantages Duplication of central and divisional functions Fragmentation and non-cooperation Danger of loss of central control 12-11

Exhibit 12.4 A Matrix Structure 12-12

Matrix Structures Advantages Integrated knowledge Flexible Allows for dual dimensions Disadvantages Length of time required for decision making Unclear job and task responsibilities Unclear cost and profit responsibilities High degrees of conflict 12-13

Exhibit 12.5 Multinational Structures 12-14

What is a Project-Based Structure? A project-based structure is one where teams are created, undertake the work, and then are dissolved. 12-15

Exhibit 12.6 Comparison of Structures 12-16

Design Tests for Checking Structural Solutions Market-Advantage Parenting Advantage People Feasibility Specialised Cultures Difficult Links Redundant Hierarchy Accountability Flexibility 12-17

Exhibit 12.7 Types of Control Processes 12-18

What is a Balanced Scorecard? Balanced scorecards combine both qualitative and quantitative measures, acknowledge the expectations of different stakeholders and relate an assessment of performance to choice of strategy. 12-19

Exhibit 12.8 An Example of the Balanced Scorecard 12-20

What is Devolution? Devolution concerns the extent to which the centre of an organisation delegates decision making to units and managers lower down in the hierarchy. 12-21

Exhibit 12.9 Relating Internally and Externally 12-22

Strategy Styles for Division of Responsibility Strategic planning style Financial control style Strategic control style 12-23

Exhibit 12.10 Strategic Planning Style 12-24

Exhibit 12.11 Financial Control 12-25

Exhibit 12.12 Strategic Control 12-26

Methods of Relating Externally Outsourcing Strategic Alliances Networks Virtual organisations Use Amazon. Begin at 3:40 and stop at 4:13. This is section on infrastructure and physical versus virtual space. 12-27

Exhibit 12.14 Dilemmas in Organising for Success 12-28

Chapter Summary (1) Organising for success is about an organisation’s configuration, built on three related strands: structures, processes, and relationships Successful organising means responding to the key challenges facing the organisation: control, change, knowledge and internationalisation There are many structural types, each with its own strengths and weaknesses 12-29

Chapter Summary (2) There are a range of different organisational processes, direct or indirect and focused on input or outputs, to facilitate strategy Relationships are important for success Separate organisational strands should come together to form a coherent reinforcing cycle 12-30

Key Debate: Does Structure Follow Strategy? Hall and Saias suggest that organisational structures can influence the kinds of strategies that management teams will pursue. What kinds of organisations might be particularly susceptible to structural constraints on their strategies? 12-31

Case Example: Hurricane Katrina 12-32

Case Example: Hurricane Katrina What was the strategy of the Department of Homeland Security in the period immediately before Hurricane Katrina? In the light of this strategy, what if any changes should be made to the Department’s organisational structure? Who was responsible for the organisational failures surrounding the response to Katrina? 12-33