Table of Contents I….

Table of Contents

I.
.blackboard.com/bbcswebdav/pid-1577157-dt-content-rid-8329276_2/courses/MGT-510-11538-201410/courseModules_fall2014b/MGT510_9/mgt510_9.html” title=”Page 1″>Strategy Implementation: The Path to
Success

II.
.blackboard.com/bbcswebdav/pid-1577157-dt-content-rid-8329276_2/courses/MGT-510-11538-201410/courseModules_fall2014b/MGT510_9/mgt510_9.html” title=”Page 2″>Organizational Design and Operations
in Strategy Implementation

I. Strategy Implementation:
The Path to Success
Realistically, a strategy
cannot be realized until it is fully functioning. That is why strategy
implementation is so critical to business success. For strategy to be realized,
all elements of an organization must be aligned and working toward the same
goal. If alignment is to be achieved, the constant changes in an industry and
general environment mean that strategies must be changed and organizations must
respond to new directions and regain alignment. Many organizations are functionally
oriented, meaning that management structures follow the lines of function;
for example, finance, marketing, operations, information technology, and human
resources. Alignment within the functional area is important for cost-efficiency,
specialization, and quality. However, organizational performance is also
contingent on cross-functional factors, such as systems, processes, and
shared values, necessitating that alignment is many directional.
Peters’ and Waterman’s 1982
publication of the McKinsey 7-S Model introduced a cross-functional way
of approaching strategy execution (Higgins, 2005). The authors suggested that
every factor that impacts organizational performance is encompassed in one of
the “S’s.â€
The cross-functional model
was based on the S’s shown here. Note that the arrows are randomly connecting
the seven S’s.
.0/msohtmlclip1/01/clip_image001.png” alt=”Elements of mckinsey’s 7-s model connected by arrows going in various directions.”>
Now see how the meaning
communicated by this illustration changes when you point all the arrows toward
a target.
.0/msohtmlclip1/01/clip_image002.png” alt=”Elements of mckinsey’s 7-s model with arrows for each element all pointing to the right toward a target.”>
Higgins (2005) added an
eighth “S†by purporting that if the seven were aligned, the result was
increased strategic performance.
.0/msohtmlclip1/01/clip_image003.png” alt=”Elements of mckinsey’s 7-s model with arrows for each element all pointing to the right toward the eighth s: strategic performance.”>
Higgins (2005) suggested
that the 8-S model is used in strategy planning, such that when the
implementation plan is under development, there are some agreed-upon principles
that were already identified in strategy sessions.
There are numerous reasons
why organizations have difficulty in gaining alignment. There are times when a
particular strategy cannot be implemented quickly because of the number of
systems, processes, and policies that have to be designed, and the time needed
to train employees and shift the values of the organization. Attempting to move
the organization too quickly or too soon is a high risk to successful strategy
implementation. Thus, leaders must remain cognizant of the organization’s
ability to adapt, to manage the process and, perhaps most importantly, to lead
the change effort.
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II. Organizational Design
and Operations in Strategy Implementation
Functional operations are
impacted by the entire realm of cross-functional factors discussed in the 8-S
model detailed on the previous lecture page. One way that companies control the
functions in an organization is through lines of authority and decision making.
Another mechanism closely tied to control is the way that formal communication
is distributed.
So, organizational design
must include some control mechanisms; however, depending on the corporate
strategies, the structures also promote or reduce the probability of
interaction, coordination, or cooperation. Study the figure below to view two
structures with different interaction requirements:
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Click to Enlarge (Source: Grant & Jordan, 2012, chap. 9, slide 7)
The (a) structure above is
one of self-designing teams. The team must interact to agree upon and establish
the operating principles, because there is no established leader,
decision-making process, or communication channels. The outcome may be
successful and the number of interactions is noted (in this example as ten
interactions). In structure (b) above, the lines of reporting, communication,
and decision making are clear and four interactions are noted. Note: The
fewer the number of interactions, the lower the cost to transact business.
In mature organizations,
bureaucracy and hierarchyare common and necessary to maintain
controls and meet legal and regulatory requirements. Hierarchies are also quite
efficient, making the design a low-cost alternative to some other structures. A
functionalhierarchical structure is displayed in the following figure:
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Click to Enlarge (Source: Grant & Jordan, 2012, chap. 9, slide 9)
In this type of
organizational structure, there are often limitations to interaction and
coordination among units. For example, a design that puts a lot of control in
the hands of senior management leaves more junior employees with little
flexibility or decision-making power. However, these structures are efficient
and cost-effective, and develop a strong common language and culture.
Another organizational
design is very common when organizations have diversified, either by adding
products or by extending geographic reach. Shown below is the 2008 General
Electric multidivisional structure that promoted alignment through the
common use of tools coming from corporate headquarters into all business units:

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Click to Enlarge (Source: Grant & Jordan, 2012, chap. 9, slide 10)
The third type of
organizational design shown below is the matrix structure. Note the
added complexity of reporting and controls to meet the necessity of coordinating
across the organization:
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Click to Enlarge (Source: Grant & Jordan, 2012, chap. 9, slide 11)
Now,
return to the core of this course and strategy planning. Place organizational
design and operations in the context of strategy planning as you watch the
following video. Look for elements that may help guide your assessment for this
week’s Critical Thinking assignment:
Michael Glenn Overview
Organization Design

Description: This is a 4.5-minute video clip
on Organization Design.
References:
Grant, R. M., & Jordan J. (2012). Foundations of strategy
[PowerPoint slides]. Hoboken, NJ: John Wiley & Sons.
Higgins, J. (2005). The eight ‘S’s of successful strategy
execution. Journal of Change Management, 5(1), 3-13.