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Transforming Fear to Joy

Designing the Adaptive Enterprise—Part II: Strategy and Structure

This is a three-part blog, click here to read Part I and Part III.

 

In my July 2011 blog, Emerging Organization Designs – Part I: Models of Form I wrote about strategy shaping organizational design.  Jay Galbraith (1995) furthers understanding of the organizational design process by stating “organizational design decisions are the shapers of the organization’s decision process”.  In summing up these two statements, we can conclude that different organizational strategies require different organizational designs or structures.

A quick read of July’s blog will refresh your memory of three emerging organizational structures we are seeing in today’s market place, but what do we mean by organizational strategy and how does it fit in this framework?  I am not surprised if it seems confusing to you as no real agreement exists in the business literature on a concise definition of organizational strategy.

Depending on which business author you favour reading, strategy is defined as:

– maneuvering into position (foresight and knowing what to do)
– fulfillment of policies and plans to create advantage
– a means (policies) to clear and visible ends (goals)
– directional decisions (purpose, mission) and actions (deployment of resources)
– a focused perspective (single driving force, clear core values)
– differentiating oneself in the customers’ eyes (competitive position, uniqueness)
– choosing a value discipline (customer intimacy, operational excellence, product leadership)

For the sake of brevity, understanding and the purposes of this blog, I coupled together the following definition:

Strategy is a perspective, position, and plan realized over time through a
pattern of decisions and actions (Henry Mintzberg) that differentiate
and deliver a unique mix of value (Michael Porter) to the customer.

Regardless, if one’s analysis of strategy crosses a broader view, in order for an enterprise’s business strategy to be successful, it must differentiate and deliver value from its customers’ perspective.  What is implied here is clarity on and appreciation for what distinguishes the enterprise from all others.  With this enterprise awareness of its uniqueness and of current customer demand to optimize operational excellence and innovation simultaneously, it follows that structures and systems are required to enable and coordinate decision-making.

In an hierarchical, centralized structure, such as in the figure below, each level in the organization has a different set of roles, responsibilities and decisions associated with it.  Typically, strategy is the purview of the senior management team (CEOs and VPs) and seeks to answer “What?” — What business are we in?  What assumptions do we hold?  What global trends are impacting us?  What are our goals – growth? excellence? profit? innovation?