1. Organizational Development and Change Management
Lecture 5: Strategies, Goals and Structures

2. Objectives To discuss how strategy is formulated within organizations
To examine the different interests of groups within and outside organizations as well as their power – and, hence, ability to influence the either the goals of organizations or the organization’s ability to achieve those goals.
To examine the links, once again, between strategy and structure.

3. OFFICIAL GOALS, MISSION STATEMENTS AND OPERATIVE GOALS I
Mission statements provide:
External legitimacy
Internal communication
Operative goals:
Financial performance
Growth and market share
Employee development goals
Productivity goals
Quality goals
Innovation goals

4. OFFICIAL GOALS, MISSION STATEMENTS AND OPERATIVE GOALS II
Functions of operative goals:
Employee direction and motivation
Decision guidelines
Criteria of performance

6. Tesco’s ‘Steering Wheel’
The Steering Wheel unites the Group’s resources and in particular focuses the efforts of our staff around our customers, people, operations, finance and the community. Its purpose is to ensure Tesco puts appropriate balance into the trade-offs that need to be made all the time between the main levers of management – such as delivery of customer metrics, operations measures and financial measures.
It enables the business to be operated and monitored on a balanced basis with due regard to the needs of all stakeholders. For the owners of the business, it is simply based around the philosophy that if we look after customers well and operate efficiently and effectively, shareholders’ interests will always be best served by the inevitable outputs of those – growth in sales, profits and returns.

7. THE STRATEGY-STRUCTURE ISSUE IS NEVER FULLY RESOLVED
THE STRATEGY-STRUCTURE ISSUE IS NEVER FULLY RESOLVED! THE ADAPTIVE CYCLE
1. ENTREPRENEURIAL PROBLEM
CHOICE OF PRODUCT MARKET DOMAIN AND ORGANISATIONAL COMPETENCE
3. THE ORGANIZATION-DESIGN PROBLEM
MANAGING UNCERTAINTY BY RATIONALISING ACTIVITIES AND FACILITATING FUTURE INNOVATION
2. ENGINEERING PROBLEM
CHOICE OF TECHNOLOGY

8. DEFENDERS I STRATEGIC CHOICES: RISK:
DOMINATE NARROW DOMAIN BY PRICING AND SERVICE
INCREMENTAL GROWTH
LITTLE SCANNING
IMITATIVE INNOVATIONS
RISK:
MARKET CHANGES THREATEN NICHE

9. DEFENDERS II ENGINEERING CHOICES: RISK:
SINGLE CORE COST EFFICIENT TECHNOLOGY
VERTICAL INTEGRATION
COST REDUCTION IMPROVEMENTS
RISK:
MARKET CHANGES THREATEN TECHNOLOGY

10. DEFENDERS III ORGANIZATION-DESIGN CHOICES: RISKS: MACHINE BUREAUCRACY
PRODUCTION AND FINANCE
INTENSIVE, SOLUTION-ORIENTED PLANNING
HIGH STANDARDISATION AND CENTRALISATION
RISKS:
SLOW TO ADAPT

11. Questions What organizations would you describe as being defenders?
Why are they defenders?

12. PROSPECTORS I STRATEGIC CHOICES: RISK:
CREATE AND EXPLOIT NEW PRODUCTS AND MARKETS
BROAD AND DYNAMIC DOMAINS
DISCONTINUOUS GROWTH
SCANNING PRODUCT AND MARKET ENVIRONMENTS
OFFENSIVE INNOVATIONS
RISK:
EXTENDED RESOURCES AND LOW PROFITABILITY

13. PROSPECTORS II ENGINEERING CHOICES: RISK:
FLEXIBLE, MULTIPLE TECHNOLOGIES
LIMITED MECHANISATION
RISK:
FAILURE TO ACHIEVE TECHNOLOGICAL ECONOMIES OF SCALE

14. PROSPECTORS III ORGANIZATION-DESIGN CHOICES: RISK: ADHOCRACY
LARGE DYNAMIC COALITION - R&D, MARKETING
PRODUCT MARKET-BASED GROUPINGS
EXTENSIVE PROBLEM FINDING PLANNING
LOW STANDARDISATION, LOW CENTRALISATION
ELABORATE LIAISON MECHANISMS
RISK:
INEFFICIENT USE OF RESOURCES

15. ANALYSERS I STRATEGIC CHOICES: RISK:
COMBINE EXPLOITATION OF NEW PRODUCTS AND MARKETS WITH DOMINATION OF STABLE DOMAIN
HYBRID DOMAINS
EFFICIENCY AND INNOVATION GOALS
SCANNING FOR MARKETS MORE THAN FOR PRODUCTS
DEFENSIVE INNOVATIONS
RISK:
IMBALANCE BETWEEN FLEXIBILITY AND STABILITY

16. ANALYSERS II ENGINEERING CHOICES: RISK: DUAL TECHNOLOGICAL CORE
INVESTMENT IN APPLIED RESEARCH
RISK:
FAILURE TO ACHIEVE EITHER INNOVATION OR EFFICIENCY

17. ANALYSERS III ORGANIZATION-DESIGN CHOICES: RISKS:
DIFFERENTIATION TO FIT DISPARATE STRATEGIES
MKTG AND APPLIED RESEARCH, CORE- PERIPHERY COALITION
MATRIX STRUCTURE
INTENSIVE AND EXTENSIVE PLANNING
MIXED STANDARDISATION WITH NUMEROUS CO-ORDINATION MECHANISMS
RISKS:
FAILURE TO INTEGRATE EFFECTIVELY HIGH CO-ORDINATION COSTS

18. ENVIRONMENTS, STRATEGIES AND TECHNOLOGIES
DEFENDERS
PROSPECTORS
ANALYSERS
ENVIRONMENTS
STABILITY
HIGH
LOW
VARIED
COMPLEXITY
HOSTILITY
MEDIUM
DISPARITY
ENVIRONMENTAL SCANNING
LIMITED
BROAD
MKTG AND R&D
MKTG AND R&D AND APPLIED RESEARCH
TECHNOLOGY
MIXED
DOMINANT COALITION
SIZE
SMALL
LARGE
BACKGROUND
PROD. FINANCE
R&D MKTG.
MKTG. APPLIED RES.

19. Conclusions
If a strategy is to be successful, the organization’s structure must be aligned to that strategy.
Strategy should, therefore, be seen as a coherent organizational design and practices that support the attainment of certain objectives.