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

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

3 Organisational Structure n Should be suitable for the company’s business n Allow capability of achieving mission n Determines communication channels n Shows lines of authority n Reflects managerial independence n 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 n Lack of flexibility to changing mission needs/rapidly changing world n Internal and external communication (ideas are not communicated) n Slow/Poor in response to customer n Turf battles n Failure to get things done n Customers deal with many unknown contacts

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

8 Horizontal Boundaries in Organisations n Boundaries which exist between organization functional units. n Each unit has a singular function. n 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 n Barriers between the organization and the outside world (customers, suppliers, other government entities, special interest groups, communities). n Customers are the most capable of identifying major problems in the organization and are interested in solutions. n Problem: Lose sight of the customer needs and supplier requirements

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

12 The Boundaryless Organisation n One that makes all of these barriers much more permeable than they are now; loosen boundaries n Lets information/ideas/resources/energy flow throughout the organization and into others n Always have some hierarchy, functional divisions, geographic boundaries, limits between organization

13 Loosening Barriers n Communication - leads to shared values n Try new processes to work better n Involve all the people who have a stake in the boundaryless organization n Create environment for entrepreneurs n +ve attitude working with new people n Stay in touch n Person you communicate with is customer

14 Are You A Boundaryless Leader? 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 n Decentralization of authority n Information sharing n Diffusion and distribution of competency n Overcoming of issues ä People issues (Turf mentality) ä Resistance to change ä Cost issues

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