Advance topics in Change Management Lecture 6: Strategies, Goals and Structures Continued

Objectives To discuss how strategy is formulated within organizations To examine the different interests of groups within and outside organizations as well as their power – and, hence, ability to influence the either the goals of organizations or the organization’s ability to achieve those goals. To examine the links, once again, between strategy and structure.

OFFICIAL GOALS, MISSION STATEMENTS AND OPERATIVE GOALS I Mission statements provide: –External legitimacy –Internal communication Operative goals: –Financial performance –Growth and market share –Employee development goals –Productivity goals –Quality goals –Innovation goals

OFFICIAL GOALS, MISSION STATEMENTS AND OPERATIVE GOALS II Functions of operative goals: –Employee direction and motivation –Decision guidelines –Criteria of performance

Tesco’s ‘Steering Wheel’ The Steering Wheel unites the Group’s resources and in particular focuses the efforts of our staff around our customers, people, operations, finance and the community. Its purpose is to ensure Tesco puts appropriate balance into the trade-offs that need to be made all the time between the main levers of management – such as delivery of customer metrics, operations measures and financial measures. It enables the business to be operated and monitored on a balanced basis with due regard to the needs of all stakeholders. For the owners of the business, it is simply based around the philosophy that if we look after customers well and operate efficiently and effectively, shareholders’ interests will always be best served by the inevitable outputs of those – growth in sales, profits and returns.

THE STRATEGY-STRUCTURE ISSUE IS NEVER FULLY RESOLVED! THE ADAPTIVE CYCLE 1. ENTREPRENEURIAL PROBLEM CHOICE OF PRODUCT MARKET DOMAIN AND ORGANISATIONAL COMPETENCE 2. ENGINEERING PROBLEM CHOICE OF TECHNOLOGY 3. THE ORGANIZATION-DESIGN PROBLEM MANAGING UNCERTAINTY BY RATIONALISING ACTIVITIES AND FACILITATING FUTURE INNOVATION

DEFENDERS I STRATEGIC CHOICES: –DOMINATE NARROW DOMAIN BY PRICING AND SERVICE –INCREMENTAL GROWTH –LITTLE SCANNING –IMITATIVE INNOVATIONS RISK: –MARKET CHANGES THREATEN NICHE

DEFENDERS II ENGINEERING CHOICES: –SINGLE CORE COST EFFICIENT TECHNOLOGY –VERTICAL INTEGRATION –COST REDUCTION IMPROVEMENTS RISK: –MARKET CHANGES THREATEN TECHNOLOGY

DEFENDERS III ORGANIZATION-DESIGN CHOICES: –MACHINE BUREAUCRACY –PRODUCTION AND FINANCE –INTENSIVE, SOLUTION-ORIENTED PLANNING –HIGH STANDARDISATION AND CENTRALISATION RISKS: –SLOW TO ADAPT

Questions What organizations would you describe as being defenders? Why are they defenders?

PROSPECTORS I STRATEGIC CHOICES: –CREATE AND EXPLOIT NEW PRODUCTS AND MARKETS –BROAD AND DYNAMIC DOMAINS –DISCONTINUOUS GROWTH –SCANNING PRODUCT AND MARKET ENVIRONMENTS –OFFENSIVE INNOVATIONS RISK: –EXTENDED RESOURCES AND LOW PROFITABILITY

PROSPECTORS II ENGINEERING CHOICES: –FLEXIBLE, MULTIPLE TECHNOLOGIES –LIMITED MECHANISATION RISK: –FAILURE TO ACHIEVE TECHNOLOGICAL ECONOMIES OF SCALE

PROSPECTORS III ORGANIZATION-DESIGN CHOICES: –ADHOCRACY –LARGE DYNAMIC COALITION - R&D, MARKETING –PRODUCT MARKET-BASED GROUPINGS –EXTENSIVE PROBLEM FINDING PLANNING –LOW STANDARDISATION, LOW CENTRALISATION –ELABORATE LIAISON MECHANISMS RISK: –INEFFICIENT USE OF RESOURCES

ANALYSERS I STRATEGIC CHOICES: –COMBINE EXPLOITATION OF NEW PRODUCTS AND MARKETS WITH DOMINATION OF STABLE DOMAIN –HYBRID DOMAINS –EFFICIENCY AND INNOVATION GOALS –SCANNING FOR MARKETS MORE THAN FOR PRODUCTS –DEFENSIVE INNOVATIONS RISK: –IMBALANCE BETWEEN FLEXIBILITY AND STABILITY

ANALYSERS II ENGINEERING CHOICES: –DUAL TECHNOLOGICAL CORE –INVESTMENT IN APPLIED RESEARCH RISK: –FAILURE TO ACHIEVE EITHER INNOVATION OR EFFICIENCY

ANALYSERS III ORGANIZATION-DESIGN CHOICES: –DIFFERENTIATION TO FIT DISPARATE STRATEGIES –MKTG AND APPLIED RESEARCH, CORE- PERIPHERY COALITION –MATRIX STRUCTURE –INTENSIVE AND EXTENSIVE PLANNING –MIXED STANDARDISATION WITH NUMEROUS CO-ORDINATION MECHANISMS RISKS: –FAILURE TO INTEGRATE EFFECTIVELY HIGH CO-ORDINATION COSTS

ENVIRONMENTS, STRATEGIES AND TECHNOLOGIES DEFENDERSPROSPECTORSANALYSERS ENVIRONMENTS STABILITYHIGHLOWVARIED COMPLEXITYLOWHIGH HOSTILITYMEDIUM LOW DISPARITYLOW HIGH ENVIRONMENTAL SCANNING LIMITEDBROAD MKTG AND R&DMKTG AND R&D AND APPLIED RESEARCH TECHNOLOGY STABILITYHIGHLOWMIXED COMPLEXITYLOWHIGH DOMINANT COALITION SIZESMALLLARGEMEDIUM STABILITYHIGHLOWMEDIUM BACKGROUNDPROD. FINANCER&D MKTG.MKTG. APPLIED RES.

Conclusions If a strategy is to be successful, the organization’s structure must be aligned to that strategy. Strategy should, therefore, be seen as a coherent organizational design and practices that support the attainment of certain objectives.