Strategy, Organization Design, and Effectiveness Chapter Two Strategy, Organization Design, and Effectiveness Thomson Learning ©

Top Management Role in Organization Direction, Design, and Effectiveness External Environment Organization Design Opportunities Threats Uncertainty Resource Availability Structural Form – learning vs. efficiency Information and control systems Production technology Human resource policies, incentives Organizational culture Interorganizational linkages Effectiveness Outcomes Strategic Direction Resources Efficiency Goal attainment Competing values Define mission, official goals Select operational goals, competitive strategies CEO, Top Management Team Internal Situation Strengths Weaknesses Distinctive Competence Past Performance Source: Adapted from Arie Y. Lewin and Carroll U. Stephens, “Individual Properties of the CEO as Determinants of Organization Design,” unpublished manuscript, Duke University, 1990; and Arie Y. Lewin and Carroll U. Stephens, “CEO Attributes as Determinants of Organization Design: An integrated Model,” Organization Studies 15, no. 2 (1994): 183-212 Thomson Learning ©

Goal Type and Purpose Type of Goals Purpose of Goals Official Goals, mission: Legitimacy Operative goals: Employee direction and motivation Decision guidelines Standard of performance Thomson Learning ©

Porter’s Competitive Strategies Advantage Low Cost Uniqueness Competitive Scope Broad Low-Cost Leadership Differentiation Narrow Focused Low-Cost Focused Thomson Learning ©

Miles and Snow’s Strategy Typology Prospector Learning orientation; flexible, fluid, decentralized structure Strong capability in research Values creativity, risk-taking, and innovation Defender Efficiency orientation; centralized authority and tight cost control Emphasis on production efficiency, low overhead Close supervision; little employee empowerment Source: Based on Michael Treacy and Fred Wiersema, “How Market Leaders Keep Their Edge,” Fortune February 6, 1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson, Strategic Management (St. Paul, Minn.: West, 1995), 100-113; and Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L. Coleman, Jr., “Organizational Strategy, Structure, and Process,” Academy of Management Review 3 (1978), 546-562 Thomson Learning ©

Miles and Snow’s Strategy Typology (cont’d) Analyzer Balances efficiency and learning; tight cost control with flexibility and adaptability Efficient production for stable product lines; emphasis on creativity, research, risk-taking for innovation Reactor No clear organizational approach; design characteristics may shift abruptly depending on current needs Thomson Learning ©

Contingency Factors Affecting Organization Design Prospector Defender Analyzer Reactor Low Cost Leadership Differentiation Thomson Learning ©

Contingency Factors Affecting Organization Design Environment Size/ Life Cycle Technology Culture Strategy Organizational Structure and Design The Right Mix of Design Characteristics Fits the Contingency Factors Thomson Learning ©

Contingency Approaches to the Measurement of Organizational Effectiveness External Environment Resource Inputs Organization Internal activities and processes Product and Service Outputs Resource-based approach Internal process approach Goal approach Thomson Learning ©

Resource-based Approach Contingency Approaches to the Measurement of Organizational Effectiveness Goal Approach Resource-based Approach Internal Process Approach Thomson Learning ©

Four Models of Effectiveness Values STRUCTURE Flexibility Human Relations Emphasis Primary Goal: human resource development Subgoals: cohesion, morale, training Open Systems Emphasis Primary Goal: growth, resource acquisition Subgoals: flexibility, readiness, external evaluation F O C U S Internal External Internal Process Emphasis Primary Goal: stability, equilibrium Subgoals: information management, communication Rational Goal Emphasis Primary Goal: productivity, efficiency, profit Subgoals: planning, goal setting Control Adapted from Robert E. Quinn and John Rohrbaugh, “A Spatial Model of Effectiveness Criteria: Toward a Competing Values Approach to Organizational Analysis,” Management Science 29 (1983): 363-377; and Robert E. Quinn and Kim Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33-51. Thomson Learning ©

Effectiveness Values for Two Organizations STRUCTURE FLEXIBILITY Human Relations Emphasis Open Systems Emphasis ORGANIZATION A ORGANIZATION B F O C U S INTERNAL EXTERNAL Internal Process Emphasis Rational Goal Emphasis CONTROL Thomson Learning ©