Organizing for the Future
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- Clementine Melinda Webb
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1 Organizing for the Future Arnoldo C. Hax Galbraith, Designing Organizations, JosseyBass, Galbraith, and Lawler III, et al, Organizing for the Future: The New Logic for Managing Complex Organizations, JosseyBass, Mohrman, et al, Tomorrow s Organizations, JosseyBass, 1998.
2 Strategic Management Framework Planning Information Business Control & Reward Process Process Process Process Strategy Structure Processes Performance Technology Globalization New Organization Forms Processes Activities Benchmarking ActivityBased Costing Balanced Scorecard Culture
3 The ValueAdding Corporation: Matching Structure with Strategy Strategy Single business Related diversification Unrelated diversification Growth Internal Internal Acquisition Structure Functional Divisional Holding company Strategy Structure Centralization Staff Staff Role Single Functional High Small Policy Related Divisional Moderate Large Policy/Review Unrelated Holding company Low Small Service Strategy Control Data Type of Control Single Cost Operational Related Profit Strategic Unrelated Investment Financial Strategy Single Compensatio n Company Variable Low Bases Company Measures Subjective Career Company Related Company Medium Division/ Company Subjective/ Objective Company Unrelated Industry High Division Objective Division
4 Policies Contrasted for Two Diversified Models Strategy Related Unrelated Structure Divisional Holding company Centralization Moderate Low Staff Large Small Staff Role Policy/Review Service Control Profit center Investment center Control type Strategic/Financial Financial Compensation Company Industry Percentage variable 1030% 50% or more Measures Subjective/Objective Objective Careers Company Division
5 New Forms of Corporate Organization: Corporate Strategy and Organization Strategy Single Dual Related Mixed Unrelated Unrelated Organizatio n Functional Front/Back Divisional Cluster Holding LBO Diversity Low High Very high ValueAdded High Low
6 Emerging FrontEnd/Back End/BackEnd Model: IBM s s FrontBack Structure CEO Human Resources CFO Legal Affairs Client/Server Computing Personal Computers Financial Services Process Industries R&D R&D Sales Sales Manufacturing Manufacturing Service Service Product marketing Product marketing Application software Application software Customer education Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
7 IBM s CustomerProduct Structure Client/Server Computing Financial Services R&D Manufacturing Marketing Sales Service Personal Computers Retailing R&D Manufacturing Marketing Sales Service Storage Products Consumer Goods R&D Manufacturing Marketing Sales Service Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
8 GE s s SBU Structure Jet Engines R&D Manufacturing Marketing Sales Service Major Appliances R&D Manufacturing Marketing Sales Service Medical Electronics R&D Manufacturing Marketing Sales Service Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
9 Mirror Image Structure: Hybrid Functional/Geographical Structure with Functional Integrators and Teams General Manager Human Resources Finance Operations Marketing Purchasing Northern region Central region Southern region Purchasing Purchasing Purchasing Operations Operations Operations Functional crossgeographical teams Marketing Marketing Marketing Human Resources Human Resources Human Resources Finance Finance Finance
10 Mirror Image Structure: Hybrid Structure Plus with Product Teams General Manager Human Resources Finance R&D Operations Marketing New product teams Purchasing Northern region Central region Southern region Purchasing Operations Marketing Human Resources Finance Purchasing Operations Marketing Human Resources Finance Purchasing Operations Marketing Human Resources Finance
11 Hybrid Structure for Financial Services General Manager Finance Human Resources Corporate Development Insurance Mutual Funds Certificates Field Units: Sales & Marketing Regional Team Underwriting Claims Investments Information technology Product marketing Money markets Stocks Bonds Information technology Product marketing Information technology Product marketing Insurance Mutual funds Certificates Joint ventures Financial consultation Direct marketing 401K plans Segment marketing Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
12 FrontBack Linkage: Regional Teams General Manager Finance Human Resources Corporate Development Insurance Mutual Funds Certificates Field Units: Sales & Marketing Marketing Council Product marketing Product marketing Product marketing Manager Segment marketing Financial consultants Regional Teams Midwest Northeast South West Canada Midwest Northeast South West Canada Midwest Northeast South West Canada Midwest Northeast South West Canada Midwest Northeast South West Canada Product Database Customer Database Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
13 FrontEnd Structure CEO Staff Front End Paper Group Toiletries Group Soup Group Regional Team Customer Team Finance Marketing Sales Operations Marketing Distribution Sales Boys Safeway Vons I.T. Operations Group Sales Soap Food Group Sales Toiletries Group Sales Paper Soap Food Toiletries Paper Soap Food Toiletries Paper Soap Food Toiletries Paper Soap Food Toiletries Paper Soap Food Toiletries Paper Soap Food Toiletries Paper Soap Food Toiletries Paper Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
14 Levels of International Development Level Proportion of Assets & Employees Outside of the Home Country Role of the Subsidiary Type of International Organization I Zero None National company II Low Startup International geographical division III Moderate Implementer Multidimensional network IV High Leader Transnational organization Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
15 The Matrix Structure of Asea Brown Boveri CEO Business Segment Region Business Area Country Country Business Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
16 Distribution of Power Between Axes Business Amount of Power Country Country Matrix Business Structure Structure Structure 1. Voluntary organization (selforganizing network) 2. Virtual teams 3. Formal teams 4. Business or country manager as fulltime team leader 5. Matrix organization Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
17 Coordination among the Power Between Axes Nestlé ABB Hewlett Packard Business Amount of Power Country Country Structure Economic activity of host governments Matrix Structure Crossborder coordination Business Structure Diversity of firm s business portfolio Source: Mohrman, et al, Tomorrow s Organization, JosseyBass, 1998.
18 The Realities of a Truly Global Corporation Multicultural employees (cultural barriers, different work practices and legal environments, varying degrees of skill levels) Broad spectrum of competitive environments (number and type of competitors, different levels of protectionism and regulatory environment) Varying efficiency of manufacturing assets Varying degree of infrastructure quality (communications and transportation) Communications challenges (time zones, holidays, language barriers)
19 The Realities of a Truly Global Corporation (cont d.) YET To become a world class corporation the entire corporation has to be oriented towards one high standard of world class performance. Make all employees feel that they are part of a global organization striving for world class status, and feel local at the same time in the execution of their programs.
20 ABB s Paradoxes Being able to thrive in an environment which is: global and local complex and simple big and small centralized and decentralized changing and stable
21 The Renewal Process Managing the tension RENEWAL PROCESS between shortterm term performance and longterm Creating and maintaining ambition organizational trust Managing operational interdependencies and personal networks Creating and pursuing opportunities INTEGRATION PROCESS Linking skills, knowledge and resources ENTREPRENEUR IAL PROCESS Shaping and embedding corporate purpose Developing and nurturing organizational values Reviewing developing g and supporting initiatives Establishing strategic mission and performance standards Frontline Middle Top Management Management Management
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