Strategy Implementation

Organizing for action

The three strands

• The configuration of Structure

• The processes that drive people

• Relationships that connect people within and around

Structural Types

• Functional Structure

CEO

Production Finance Marketing Operations

Advantages & Disadvantage

• + CEO in touch with all operations

• + Reduces/ simplifies control

• + Clear definition of responsibilities

• - Senior managers burdened with chores

• - No time for strategic thinking

• - Coordination between functions difficult

The multidivisional structure

Head Office

Division A Division B Division C

Function 1 Function 2

Central Service

Function 4 Function 5Function 3

Advantages and Disadvantages

• + Flexible ( add / divest divisions )

• + Control by performance

• + Ownership of Strategy

• - Additional costs for the centre

• - Duplication at divisional level

• - Fragmentation and non cooperation

The holding company

• A Holding company is an investment company consisting of shareholdings in a variety of separate business operations

• Holding companies are extremely flexible

• However little scope of synergy

Matrix Structure

Product1

Manager

EMEA

Product 1

Manager

AG

Product 1

Manager

AP

Product1

Manager

LA

Product 2

Manager

EMEA

Product 2

Manager

AG

Product 2

Manager

AP

Product 2

Manager

LA

Product 3

Manager

EMEA

Product 3

Manager

AG

Product 3

Manager

AP

Product 3

Manager

LA

Advantage and Disadvantage

• + Integrate knowledge

• + Flexible

• + Allow dual dimensions

• - Time taken to make decisions

• - Fuzzy job / task responsibilities

• - Degrees of conflict inherent

Transnational Structure

International Divisions Global Product Divisions

Local subsidiaries Transnational corporations

Characteristics of Transnational teams

• Each national unit operates independently

• National units achieve greater scale of economies through specialization

• The corporate centre manages this global network

• Very demanding of managers

Team Based Structures

• Team based structures attempts to combine both horizontal and vertical coordination through structuring people to cross functional teams

• Team based structures can help organizations respond flexibly to diverse customers

Project Based Structures

• A project based structure is one where teams are created , undertake the work and are then dissolved

• Project based structures are very flexible and can work virtually too .

Comparison of Structures

Challenge

Functional

Multidivisional

Holding

Matrix

Transnational

Team

Project

Control

I I I

I I I I I I I I I

Change

I I I I I I I I I I I I I I I I I

Knowledge

I I I I I I I I I I I I I I I

Glob I I I I I I I I I I I I I I

Relationships

Relationships

Internal External

Centre Strategy Outsourcing Alliance NetworksVirtuality

Relating internally

• Devolution concerns the extent to which the centre of an organization delegates decision making to units and managers lower down in the hierarchy

• Devolution is particularly important when knowledge is dispersed throughout the organization and responsiveness to customer needs is crucial

Relating over Strategy

• In a Strategic Planning style of control the relationship between the centre and the business units is one of parent who is the master planner prescribing detailed roles for departments and business units

Relating over Strategy

• In financial control the role of the centre is confined to setting financial targets , allocating resources, appraising performances, and intervening to avert or correct poor performances

Relating over Strategy

• Strategic control is concerned with shaping the behavior in Business Units and the context in which managers are operating

Relating externally

• Outsourcing – as in the IT & ITES domain

• Strategic Alliance

• Networks

• Virtual organisations

The Strategy Structure link

• A new strategy required a new or at least refashioned structure if the enlarged enterprise was to be operated efficiently ….Unless new structures are developed to meet new administrative needs, which result from an expansion of a firm’s activities into new areas, functions or product lines , the technological , financial & personnel economies of growth and size cannot be realized – Chandler 1962

Strategic Choices as Adaptation Processes

• Miles and Snow ( 1978 ) identified three basic problems which the organizations must identify, confront and solve

• Entrepreneurial problem : defining an organization's domain – the products / services it chooses to offer

• Engineering problem – operationalizing the management solution to the entrepreneurial problem – eg selection of appropriate technology

• Administrative problem – designing of appropriate org structure and systems for uncertainty reduction

Differences in Adaptation problems of the Three Strategic types

Adaptation problem

Defender Analyzer Prospector

Entrepreneurial

How to seal off market

How to locate new market keeping base intact

How to locate and exploit new market

Differences in Adaptation problems of the Three Strategic types

Adaptation problem

Defender Analyzer Prospector

Engineering

How to produce and distribute goods

How to be efficient in the stable domain and flexible in the rest

How to avoid commitment to a single technology process

Differences in Adaptation problems of the Three Strategic types

Adaptation processes

Defender Analyzer Prospector

Administrative

How to achieve strict control to ensure efficiency

How to differentiate the org structure to accommodate all

How to facilitate rather than control organization operation

Types of Organizational Structures

• Bases of Structural ConfigurationsA. The Strategic Apex – this consists of the

top level management B. The Operating Core – this consists of

employees who perform the basic work related to the production of goods.

C. The Middle Line- who connect the strategic apex to the operating core – intermediate managers

Types of Organizational Structures

D. The Technostructure – consists of staff functionaries and analysts who design systems for regulating and standardizing the formal planning of work . Departments such as finance , production planning , personnel

E. The Support Staff – those who provide indirect support eg cafeteria, mailing , transport etc

Simple Structures

• Where the power is centralized in the hand of the hands of one or few managers to whom everybody reports directly eg Nirma , Super Cassettes

• + Facilitates rapid decision making • + Has the capability to innovate• - Very demanding on the owner / manager• - increasingly inadequate as volumes

increase

Machine Bureaucracy

• Characterized by coordination of work through a high degree of standardization of work resulting in low skilled , highly specialized jobs eg the railways , postal department

• +Achieve efficiency through specialization• +Low cost operational and managerial • +Large size & standardization provide

stability

Machine Bureaucracy

• - Experience difficulty in inter-functional coordination and decision making

• - High cost of coordination and support

• - Find difficult to innovate and adequately respond to environmental changes

Professional Bureaucracy

• While the machine bureaucracies coordinates through standardization of work the professional bureaucracy runs by standardizing skills eg Hospitals , Universities

• + Can accomplish complex but known tasks efficiently on a large scale

• - Internal politics and rivalry among professionals may lead to loss in synergy

Divisionalized Form

• This structural form is most appropriate when the organization starts producing new products in new markets or new locations eg ITC , UB Group, Tata Sons

• + Allows division to develop • + Ensures performance by making

divisions accountable for it • - Fosters potentially dysfunctional

competition for corporate resources

Adhocracy

• Adhocracies are characterized by a high amount of complexity, non standardization and a fluidization of processes eg Adlabs, consultancy firms, moviemaking units

• + Encourage innovation and initiative• + Flexible , discourages empire building• - Weak control structure , low personal

accountability• - Are inefficient in utilization of resources

Relationships between coordinating mechanisms ( Mintzberg )

Coordinating mechanisms

Key part of the organization

Configuration

Direct supervision

Strategic Apex Simple Structure

Standardization of activities

Technostructure Machine bureaucracy

Standardization of skills

Operating Core Professional bureaucracy

Standardization of output

Middle line Divisionalised form

Mutual adjust Support Staff Adhocracy

The 7S Framework

• Beyond Structure and Strategy there are at least five other identifiable elements .

• The factors are interconnected

• There is no starting point or implied hierarchy of the factors

The 7S Framework

• Structure – what will the org be like

• Strategy – the way a company aims to improve its position vis a vis competition

• Systems – all the procedures formal and informal that make the organization go day by day

The 7S Framework

• Style – basic personality of top management team

• Staff – people as a pool of resources

• Skill – dominating attributes or capabilities

• Superordinate Goals- the fundamental ideas around which a business is built.

The 7S Framework

• Suggests the wisdom of taking the ‘ soft informal’ variables in the purview of top management interest

• Framework forces us to concentrate on the fit . Real energy comes when all the variables in the model are aligned .