Strategy and structure Thessalie RobinsonGeoff Leese November 2005

Strategy and structure Thessalie Robinson/Geoff Leese November 2005 revised September 2006, July 2007, August 2008, August 2009 1

Strategy and Structure n n n Structure must aid (not hinder!)the strategy Implies that structure may be changed when new strategy put in place Design - Formal hierarchy ä ä ä 2 Divisional Area Product/Brand

Organisational Structure Should be suitable for the company’s business n Allow capability of achieving mission n Determines communication channels n Shows lines of authority n Reflects managerial independence n Shows degree of empowerment n 3

Organising The purpose of organisation is to secure that this division [the separation and specialisation of tasks] works smoothly, that there is unity of effort or, in other words, coordination 4 Urwick 1958 Elements of Administration

Principles of Organisational Structure Objective Specialisation Coordination Authority Responsibility Definition Correspondence Span of Control Balance Continuity 5

Problems with Traditional Organisation Structures n n n 6 Lack of flexibility to changing mission needs/rapidly changing world Internal and external communication (ideas are not communicated) Slow/Poor in response to customer Turf battles Failure to get things done Customers deal with many unknown contacts

Vertical Boundaries in Organisations Boundaries between layers within an organization n Classic Example: Military organization n Problem: Someone in a lower layer has a useful idea; "Chain of command" mentality n 7

Horizontal Boundaries in Organisations Boundaries which exist between organization functional units. n Each unit has a singular function. n Problem: Each unit maximize their own goals but not the overall goal of the organization (sub-optimisation) n 8

An infantry battalion 9

External Boundaries in Organisations n n n 10 Barriers between the organization and the outside world (customers, suppliers, other government entities, special interest groups, communities). Customers are the most capable of identifying major problems in the organization and are interested in solutions. Problem: Lose sight of the customer needs and supplier requirements

Geographic Boundaries in Organisations 11 n Barriers among organization units located in different countries n Problem: Isolation of innovative practices and ideas

The Boundaryless Organisation n 12 One that makes all of these barriers much more permeable than they are now; loosen boundaries Lets information/ideas/resources/energy flow throughout the organization and into others Always have some hierarchy, functional divisions, geographic boundaries, limits between organization

Loosening Barriers n n n n 13 Communication - leads to shared values Try new processes to work better Involve all the people who have a stake in the boundaryless organization Create environment for entrepreneurs +ve attitude working with new people Stay in touch Person you communicate with is customer

Are You A Boundaryless Leader? One Who Breaks Down Vertical Boundaries Most decisions are made close to the action. You share information about overall performance and business strategy with as broad a base of constituents as possible. Your recognition and reward system is primarily team based. 14

Flat structures need Decentralization of authority Information sharing Diffusion and distribution of competency Overcoming of issues n n ä ä ä 15 People issues (Turf mentality) Resistance to change Cost issues

Further reading n n Bennett chapter 7 Butel, L et al (1998), Business Functions – an Active Learning Approach, Blackwell ä n n 16 Unit 1 Section 2 The Project Management Forum - follow the link! Stuctures explained simply - follow the link!