Organizational Structures

CPTE 433John Beckett

Sizing

• Base on business need• Challenges:

– Demonstrating need– Fractional people– Intra-unit communication overhead

• Adding more people doesn’t automatically mean more work gets done.– It does, however, require more structure– “Adding people to a late project makes it

LATER” (Brooks)

Brooks’ Dilemma

Contributions• Horsepower• Talent• Fresh viewpoint• Ability to focus on

fewer tasks (less task-switching loss)

Costs• Orientation

– Corporate culture– Local jargon– How your operations are set

up• Talents passed to others

– That’s good but it isn’t free• Interpersonal

communication overhead• Threat to existing people

– Sabotage?• Where to put them?• Tools

“Adding a person to a late project makes it later”

$ Centers

• Revenue: Brings in money from outside the company

• Cost: Serves revenue centers to make them more effective

• “Value:” Able to demonstrate quantitatively how you indirectly influence profits– Of course, everybody claims credit!“Value Center” is a term invented by John

Beckett. Introduce it as a new concept to your business people.

Centralization/Decentralization

• Fundamental issue for designing your structure.

• Do you want like-minded people distributed where needed?– Perhaps forbidden to communicate– Low power

• Do you want them centralized?– Isolated from users– Unable to show cost-effectiveness– Able to leverage unique talents better

Tactical Answer

• Every method of organization has advantages and disadvantages. So…

• Capitalize on the advantages• Mitigate the disadvantages• Monitor for ways to improve

Connection to the Top• The more you connect to the top of the

organization, the more likely you are to be viewed as a strategic contributor to success.– And viewed as a competitor for resources.

• The less you connect to the top of the organization, the more likely you are to be viewed as a cost to be contained.

• All this is “vanity”, because it ignores the overall effectiveness of the organization!

Skill Tracks

• Organizational Specialists

• Use their management skills

• Technical Specialists

• Use their technical skillsUse the skills of both types of

people, and pay them accordingly.

Sometimes technical specialistssee organizational issues the

manager types don’t see.

Sometimes managerialtypes see technical issues

techies don’t see.

Outsourcing• Look for “core competence” of firm

– Versus “generic competences” which are required of anybody to do the sort of business you do

• This is what makes your company better than the competition.

• It may be appropriate to outsource generic competencies.

• It is usually inappropriate to outsource core competences because:– You can do it better yourself– You don’t want others to capture it (which they’ll do if

you specify it fully for an outsourcing firm)• If organization is your core competence, maybe

you will outsource everything other than organization.

Technology Treadmill

• Technology does not endow a company with a permanent advantage.

• This is because technology can be replicated.• Culture Process can be a permanent

advantage because it is harder to replicate.• Support functions should support the core

competencies of the firm.– Perhaps support is itself a core competency!– Support the connections between core and

outsourced efforts

“Best Practices”

• Advantage: You use what others have learned.

• Challenges– You don’t learn what others don’t teach.– You must integrate the knowledge with

your environment and culture(s)• Best practices are one dimension of

improvement, but should not be an exclusive focus.

Consultants• Can get you “up” quickly on new projects.• Can get you dependent on them for

continued support – becoming high-cost low-structure outsourcing.

• “Management consultants take information known internally and rearrange it so top management will be willing to accept it.”– Or rubber-stamps what upper management

wants.– Response: Feed them well-reasoned arguments

for what you see is the best alternative• It may be a rare opportunity to “get through” to

management

Is Money the Only Thing that Counts

…Even in a non-profit?• Money is easier to measure than other

goals– It may be a useful indicator of accomplishment

• Money is an enabling factor– If you ignore it, you can’t do what you are

there for• A non-profit’s future is not as closely tied

to money– We could raise more– Volunteerism among workers

Non-Profits• Need “operating gain” to fund

needed investments.• Finance is a necessary dimension.• Finance is not the primary goal.• Finance is an enabling factor toward

the primary goal.• Sometimes finance “speaks” of the

need to revise the primary goal.• Case: March of Dimes

The Trend

Was• Vertically-

integrated companies

• “Tall” structures• Modest pay

increase per level• Competence focus

Moving To• Virtual firms

composed of smaller companies

• Flatter structures• Larger pay

increase per level• Project focus

Brand Equity

• A perception in the buyer’s mind that something with your brand on it is more valuable than something without your brand on it.

• Typical case: A “name brand” product that is a commodity, but which is priced higher.– Are they spending the extra money on

nothing but advertising?

Brand Equity Cases

Maytag• “Lonely repairman”

motif (premier product)

• Move toward out-sourcing

• Combination with other brands

• Focus on image• Growing customer

dissatisfaction

Hewlett-Packard• “Best of the Best”• “Not Invented

Here” syndrome– But: Laser Printers

• Move to profit focus

• Move toward out-sourcing

• “Can anybody save HP?”

Brand Equity is hard to get, easy to lose, and can be very profitable.