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
3. THE ORGANIZATION-DESIGN
PROBLEM
2. ENGINEERING PROBLEM
CHOICE OF TECHNOLOGY
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, COREPERIPHERY 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
DEFENDERS
PROSPECTORS
ANALYSERS
STABILITY
HIGH
LOW
VARIED
COMPLEXITY
LOW
HIGH
HIGH
HOSTILITY
MEDIUM
MEDIUM
LOW
DISPARITY
LOW
LOW
HIGH
ENVIRONMENTAL
SCANNING
LIMITED
BROAD
BROAD
MKTG AND R&D
MKTG AND R&D AND
APPLIED RESEARCH
ENVIRONMENTS
TECHNOLOGY
STABILITY
HIGH
LOW
MIXED
COMPLEXITY
LOW
HIGH
HIGH
SIZE
SMALL
LARGE
MEDIUM
STABILITY
HIGH
LOW
MEDIUM
BACKGROUND
PROD. FINANCE
R&D MKTG.
MKTG. APPLIED RES.
DOMINANT COALITION
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.