Strategy and structure

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

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

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

4. 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, co-ordination Urwick 1958 Elements of Administration

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

6. Problems with Traditional Organisation Structures • 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

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

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

9. An infantry battalion

10. External Boundaries in Organisations • 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

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

12. The Boundaryless Organisation • 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

13. Loosening Barriers • 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

14. Are You A BoundarylessLeader? 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.

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

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