Organization Structure and Business Strategy

1. Organization Structure and Business Strategy Colin Boyd Professor of Management University of Saskatchewan

2. The Leader Moses Agriculture Moses Banking Moses Baptism Moses Bartering Moses Clothing Moses Complaints Moses Communication Moses Construction Moses Crafts Moses Banking Moses Baptism Moses Bartering Moses Discipline Moses Education Moses Employment Moses Entertainment Moses Livestock Moses Maintenance Moses Farming Moses Fuel Moses Food Moses Health Moses Immigration Moses Justice Moses Purchases Moses Records Moses Marriages Moses Military Moses Morals Moses Offerings Moses Protection Moses Manufacturing Moses Shelter Moses Religion Moses Revenue Moses Safety Moses Sanitation Moses Scribes Moses Servants Moses Shepherding Moses Water Moses Welfare Moses Statistics Moses Storage Moses Supplies Moses Taxes Moses Travel Moses Transportation Moses Moses and the organization of the Israelitesfleeing to the Promised Land

3. Perhaps the earliest recognition of the fact that the span of control can be too large is found in the Bible. In Exodus 18 it is told: “Moses sat to judge the people and the people stood by Moses from the morning until the evening.” Moses’ father-in-law, Jethro (the first management consultant?), saw this and told him: “The thing thou doest is not good. Thou will surely wear away, both thou, and the people that is with thee: for the thing is too heavy for thee; thou art not able to perform it thyself alone.” The Leader Moses Agriculture Moses Banking Moses Baptism Moses Bartering Moses Clothing Moses Complaints Moses Communication Moses Construction Moses Crafts Moses Banking Moses Baptism Moses Bartering Moses Discipline Moses Education Moses Employment Moses Entertainment Moses Livestock Moses Maintenance Moses Farming Moses Fuel Moses Food Moses Health Moses Immigration Moses Justice Moses Purchases Moses Records Moses Marriages Moses Military Moses Morals Moses Offerings Moses Protection Moses Manufacturing Moses Shelter Moses Religion Moses Revenue Moses Safety Moses Sanitation Moses Scribes Moses Servants Moses Shepherding Moses Water Moses Welfare Moses Statistics Moses Storage Moses Supplies Moses Taxes Moses Travel Moses Transportation Moses

4. Staff Manager Solomon Assistant Leader Aaron Organization Counsel Jethro Protection Planning Joshua Tribal Relations Benjamin Labour Allocation Josephus Ruler of Thousands Ruler of Thousands Ruler of Thousands Ruler of Hundreds Ruler of Hundreds Ruler of Hundreds Ruler of Fifties Ruler of Fifties Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Moses and the new organization structure The Leader Moses

5. The Leader Moses Staff Manager Solomon Assistant Leader Aaron Organization Counsel Jethro Protection Planning Joshua Tribal Relations Benjamin Labour Allocation Josephus Ruler of Thousands Ruler of Thousands Ruler of Thousands Ruler of Hundreds Ruler of Hundreds Ruler of Hundreds Ruler of Fifties Ruler of Fifties Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Ruler of Tens Strategy, structure and the accomplishment of purpose • The subordinate rulers, Jethro suggested, could judge “every small matter” and bring the great matters to Moses. (introducing management by exception!) • Up to this point, the Israelites had spent thirty-nine years on a journey that had taken them only about halfway to the Promised Land. • After the reorganization took place, the remaining half of the journey was completed in less than a year -- a 39-fold increase in efficiency.

6. 1 The Roman Army Strategy, Structure and Purpose Purpose: Income via long-term taxation Strategy: Invade, then occupy and govern to allow the normal evolution of agriculture and commerce Structure: Rigid, hierarchical, with clear definitions of duties and roles, and of performance and promotion criteria

7. 2 Ghengis Kahn and the Moghul Hordes Ghengis Strategy, Structure and Purpose Purpose: Income, and gratification of miscellaneous base instincts Strategy: Short-term invasion for rape, pillage and plunder, then return home with the booty Structure: Loose, informal structure under a charismatic leader -- ambiguous tasks, no job definitions

8. If the environment changes, then you may be stuck with the wrong structure and culture • Computer industry very stable • IBM dominates the industry • Rigid structure • Rigid dress code “Xeroxoid” • Teetotal 1960-1980 • Computer industry totally unstable • Newcomers = greyhounds • IBM a dinosaur, stuck in the mud • IBM losses in the $10’s of billions 1980-1990

9. Lou George Hazel Amy Ted Fred Strategy and Structure Stage 1 “Entrepreneurial” Organization Joan • 5 to 50 people • no job titles • no organization chart • everyone known by their first name • growth = pressure on time of the boss • spend more time selling? • or more time in the factory? • leads to specialization by function

10. L. Hillis Accounting G. Blake Admin A. Jones Marketing & Sales D. Hager Personnel F. Bennett Manufacturing Strategy and Structure Stage 2 “Functional” Organization J. Smith General Manager • 50 to 500 people • job titles, department door signs • friction between departments • everyone known by their surname • growth = horizontal integration • new product does not fit in marketing • new product does not fit in production • leads to creation of new division

11. Headquarters Staff Division A Division B Division C Division D Stage 2 Functional Organization Strategy and Structure Stage 3 “Divisional” Organization Chief Executive • 500+ people • head office staff v line divisions • geographical dispersion common • everyone known by their employee # • friction within each stage 2 division • friction between HQ and divisions • budget friction between division heads • BCG cash reallocation problem

12. Manufacturing Marketing Marketing Region A Manufacturing Region B Manufacturing Region A Marketing Region B Strategy and Structure Geographical Divisional Organization by Function Chief Executive Lack of close contact • product homogenous across countries or regions • marketing homogenous across countries or regions • means economies of scale are more important than coordination of functions within one country or region

13. Region B Region A Marketing Marketing Manufacturing Manufacturing Strategy and Structure Geographical Divisional Organization by Region Chief Executive deviations from standards may occur • coordination of functions within countries or regions very important • allows possible variation in product or marketing across countries or regions • economies of scale and coordination within functions less important