1. Lecture 10 Organising for success (Strategy in Action)
Update

2. Learning outcomes
Analyse main organisational structural types in terms of their strengths and weaknesses.
Identify key issues in designing organisaitonal control systems.
Recognise how the three strands of strategy, structure and systems should reinforce each other in organisational configurations and the managerial dilemmas involved.

3. Role of organisational configuration
Organisational configuration is concerned with interdependency between organisational structure, strategy and systems.
How do you understand this?
e.g., organisational elements, structure and systems can shape strategy; structure can be reshaped to align with strategy.
Organisational structure?
Organisational systems?

4. Role of organisational configuration

5. Structural types Four basic structural types:
Functional, divisional, matrix, and network (and project structure, the fifth)

6. Functional Structures
Functional Structures group people with similar skills
Departmentalization
Grouping people and jobs into a work unit
Functional Structure
Work units have similar skills and tasks such as finance, marketing, production and human resources.

7. Divisional Structure
Divisional structures group together people who work on a similar product, work in the same geographical region, or serve the same customers.

8. Matrix Structure
Uses permanent cross functional teams to try to gain the advantages of both the functional and divisional approaches

9. Network Structure

10. Project-based structure

11. Choosing structures
Each structure has its own advantages and disadvantages.
Choice of a structure is based on four general criteria:
The need for control over strategy implementation
The speed of change and the increased levels of uncertainty
the growing importance of knowledge creation and knowledge-sharing
The rise of internationalisation

12. Choosing structure Criteria for structural choice Functional
Divisional
Matrix
Network
The need for control over strategy implementation X
The speed of change and the increased levels of uncertainty
The growing importance of knowledge creation and knowledge-sharing
The rise of internationalisation

13. Organisational control systems
Types of control systems
Input
Output
Direct
Planning systems
Performance targeting
Indirect
Cultural systems
Internal markets

14. Planning systems
Planning systems plan and control the allocation of resources and monitor their utilisation.
The focus is on the direct control of inputs in terms of…
Financial inputs
Human inputs
Long-term investments

15. Cultural systems
Cultural systems aim to standardise norms of behaviour within an organisation in line with particularly objectives.
Cultural systems exercise an indirect form of control. Why?
Key cultural systems are recruitment, socialisation, and reward.
Cultural systems exercise an indirect form of control, because of not requiring direct supervision but self-control by employees.
Key cultural systems are recruitment, socialisation, and reward.

16. Performance targeting systems
Performance targeting systems focus on the outputs of an organisation, e.g.
KPIs
the Balanced Scorecard approach
financial,
customer,
internal, and
innovation and learning perspectives.
Performance targeting systems focus on the outputs of an organisation (or part of an organisation), such as product quality, revenues or profits, which are often know as key performance indicators (KPIs).
The most fundamental has been the development of the Balanced Scorecard approach, which combines four specific indicators:

17. Internal market systems
Market disciplines (or internal markets) can be brought inside organisations to control activities internally.
Market systems involves some formalised system of internal transfer of resources between units.
The control focuses on outputs. Why?
The control is indirect. Why?
The control focuses on outputs: ‘contracting’ for resources or inputs from other parts of an organisation and for supplying outputs to other parts of an organisation.
The control is indirect: rather than accepting detailed performance targets determined externally, units have simply to earn their keep in competitive internal markets.

18. Configurations
Configurations are the set of organisational design elements that interlink together in order to support the intended strategy.
The McKinsey 7-S framework highlights the importance of fit between strategy, structure, systems, staff, style, skills and superordinate goals.

19. The McKinsey 7 Ss Three hard Ss: strategy, structure, and systems
Four soft Ss: skills, staff, style, and shared value

20. The McKinsey 7S Framework: Learn How to Align all Parts of Your Organization's Strategy

21. The McKinsey 7 Ss
The McKinsey 7-S framework implies three minimum aspects of organising…
Organising involves a lot more than just getting the organisational structure right; there are many other elements to attend to,
It emphasises fit between all these elements: everything from structure to skills needs to be connected together;
If managers change one element of the 7-S, the concept of fit suggests they are likely to have to change all the other elements as well in order to keep them all appropriately aligned to each other.

22. Configuration dilemmas? (self-guided study)
Is fit between elements easy to achieve in practice?
Why if yes or no?