Henry: Understanding Strategic Management

1. Henry: Understanding Strategic Management Implementation (Structure, Systems and Change) (Slides based on Chapter 10)

2. Key concepts we will cover: • Organisational Structure • Purpose and types • Organisational Systems and Control • Organisational Culture and Change • Handy’s classification of culture • Johnson’s Cultural Web • Strategic change and Lewin’s Force Field Analysis

3. Organizational Systems and Strategic change Organizational Structures The division of labour into specialized tasks and the coordination between these tasks

4. What are Organisations? 2 Main Characteristics Division of Labour or Specialisation Coordination of the sum of all individual actions Whilst there are many types of organisations - they are all primarily Tools for Purposeful Action H Mintzberg” The Structuring of Organizations” in H Mintzberg, J Lampel, J B Quinn and S Ghoshal “The Strategy Process: Concepts, Contexts, Cases”, 4th Edition, Prentice Hall, 2003, p209

5. Organizational Systems and Strategic change Organizational Structures Chandler (1962) argued that structure follows strategy Figure 10.1 Strategy & Structure

6. Organizational Systems and Strategic change Organizational Structures The Entrepreneurial Structure The Functional Structure The Divisional Structure The Matrix Structure The Network Structure

7. TOP MANAGEMENT FINANCE PRODUCTION MARKETING A. FUNCTIONAL STRUCTURE A. FUNCTIONAL STRUCTURE TOP MANAGEMENT DIVISION A DIVISION C DIVISION B B. DIVISIONAL STRUCTURE B. DIVISIONAL STRUCTURE PRODUCTION MARKETING FINANCE A MARKET A PROG’S B MARKET B MARKET C C C. MATRIX STRUCTURE C. MATRIX STRUCTURE Three Common Structures

8. Handy’s Cultural Classification • Power Culture • Central power, “radiates influence”, key individuals use, often SMEs C Handy “Understanding Organisations”, 4th edition, Penguin, 1997

9. Handy’s Cultural Classification • Person Culture • Structures serves individuals, control by mutual consent, high autonomy

10. Handy’s Cultural Classification • Role Culture • Bureaucracy, functional specialists, procedures and rules

11. Handy’s Cultural Classification • Task Culture • Project oriented, task focused, matrix arrangements, group collaboration and power

12. What is Organisational Culture? • Schein (1992) suggests culture generally is “the way in which a group of people solves problems” • He defines organisational culture as “basic assumptions and beliefs that are shared by the members of an organisation, that operate unconsciously and define in a basic taken-for-granted fashion an organisation’s view of itself and its environment” E Schein “Organisational Culture and Leadership” , 2nd edition, Jossey-Bass, 1992

13. What is Organisational Culture? “A fish only discovers its need for water when it is no longer in it. Our own culture is like water to a fish. It sustains us. We live and breathe through it.” F Trompenaars “Riding the Waves of Culture”, The Economist Books Ltd, 1993

14. Johnson’s Cultural Web Stories Symbols Rituals Paradigm Power Control Structures • from G Johnson “Managing Strategic Change: Strategy, Culture and Action” • Long Range Planning, Vol 25, no 1, 1992, pp28-36

15. Stories History and legacy; Simon Marks; staff welfare benefits Symbols St Michael brand; Simon Marks and CEOs as father figures Paradigm ‘We are the best; we set the standards’ Power Top-heavy; male dominated Routines/Rituals Defence; knowing your place; family atmosphere Control Top-down control in detail; insistence on conformity Structure Mechanistic, bureaucratic, hierarchical Example of Cultural Web: M & S in 1990s

16. Organizational Systems and Strategic change Organizational Processes Ghoshal and Bartlett (1995) undertook a study of 20 organizations in the US, Europe and Japan. They identified three distinct processes: 1. Entrepreneurial Process 2. Competence-Building Process 3. Renewal Process

17. Organizational Systems and Strategic change Strategic Control Systems Goold and Quinn (1990) suggest three reasons for establishing control systems: 1. A strategic control system helps to coordinate the activities of members of an organization 2. Strategic control systems help to motivate managers to achieve their agreed objectives 3. A strategic control system helps senior managers to know when to intervene in the decisions of their unit managers

18. Organizational Systems and Strategic change Strategic Control Systems Figure 10.6 Approaches to strategic controls in different sorts of businesses

19. Interpretations of Change EXTERNAL ENVIRONMENT ( e.g. “imposed” or reactive ) INTERNAL ENVIRONMEMT ( or organic change ) “MANAGING CHANGE” REACTIVE ? PRO-ACTIVE ?

20. Organizational Systems and Strategic change Strategic Change In a classic article Greiner (1972) argues that as organizations grow they go through five distinct phases of development. Phase 1 – Creativity Phase 2 – Direction Phase 3 – Delegation Phase 4 – Coordination Phase 5 – Collaboration

21. Organizational Systems and Strategic change Strategic Change Figure 10.7 The five phases of growth

22. Organizational Systems and Strategic change Integrative Change In discussing business process reengineering Hammer (1990) states: ‘Reengineering strives to break away from the old rules about how we organize and conduct business… reengineering cannot be planned meticulously and accomplished in small and cautious steps. It’s an all-or-nothing proposition...’

23. Lewin’s Force-Field Analysis Kurt Lewin proposed that changes result from the impact of a set of driving forces upon restraining forces Forces Pushing For • Challenges • Drivers • Incentives Forces Pushing Against • Culture • Stakeholders • Assumptions CurrentState Ideal State From K Lewin (1951) “Field Theory in Social Sciences” as cited in J Thompson and F Martin, “Strategic Management”, 5th Edition, Thomson, 2005, p817

24. Culture and Change “The organisational culture is the river of meaning in which any plans for change must be able to swim” S P Feldman “Management in Context: An Essay on the Relevance of Culture to the Understanding of Organisational Change”, Journal of Management Studies, Vol 23, No 6, Nov 1986, pp587-607

25. Organizational Systems and Strategic change Strategic Change Collins and Porras (1994) suggest that visionary organizations are particularly adept at simultaneously managing continuity and embracing change through: BHAGs – Big Hairy Audacious Goals Hamel and Prahalad(1989) - strategic intent The genius of the ‘AND’ rather than the tyranny of the ‘OR’ A cult-like culture built around the core values of the organization

26. Organizational Systems and Strategic change Collins (2001) what strategic change occurs within organizations that allows them to leap from being good to being great. Figure 10.8 Three circles of the hedgehog concept

27. Prescriptive, • Emergent Hierarchy, Centralisation Strategy Structure • Expert focus, • Team approach Systems Super- ordinate Goals Autonomy, Professionalism, Quality Assurance Skills HR Policies: Empowerment, Enrichment Staff Style Leadership: Autocratic, Participative The 7- S Framework The 7-S Framework from Robert H Waterman Jr., Thomas J Peters and Julien R Philips, “Structure is Not Organization”, Business Horizons, June 1980