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Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Part 3 Strategy Implementation
Part 3 Strategy Implementation
Zappos: Success through customer service Customer service all in-house
Zappos: Success through customer service Customer service all in-house
Zappos’ Core Values
Zappos’ Core Values
11–5
11–5
LO 11-1 Define organizational design and list its three components
LO 11-1 Define organizational design and list its three components
How to Organize for Competitive Advantage
How to Organize for Competitive Advantage
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Organizational inertia Resistance to change Often leads to failure
Organizational inertia Resistance to change Often leads to failure
Organizational Inertia
Organizational Inertia
LO 11-1 Define organizational design and list its three components
LO 11-1 Define organizational design and list its three components
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
W. L. Gore & Associates: Informality and Innovation
W. L. Gore & Associates: Informality and Innovation
Assembling the Pieces: Mechanistic vs
Assembling the Pieces: Mechanistic vs
Mechanistic vs
Mechanistic vs
LO 11-1 Define organizational design and list its three components
LO 11-1 Define organizational design and list its three components
Matching Strategy and Structure
Matching Strategy and Structure
Changing Organizational Structures and Increasing Complexity as Firms
Changing Organizational Structures and Increasing Complexity as Firms
Functional Structure
Functional Structure
Typical Functional Structure
Typical Functional Structure
Matching Business Level Strategy and Structure
Matching Business Level Strategy and Structure
USA Today: one of the widest print circulations in U.S. USA Today
USA Today: one of the widest print circulations in U.S. USA Today
Functional Strategy: Drawbacks
Functional Strategy: Drawbacks
Multidivisional Structure
Multidivisional Structure
Organizing the Diversified Firm
Organizing the Diversified Firm
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Organizing the Diversified Firm
Organizing the Diversified Firm
Typical M-Form Structure
Typical M-Form Structure
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Multidivisional Structure
Multidivisional Structure
Matching Corporate-Level Strategy
Matching Corporate-Level Strategy
11–35
11–35
11–36
11–36
Evolutionary Stability of the Multidivisional Form
Evolutionary Stability of the Multidivisional Form
Evolutionary Stability of the Multidivisional Form
Evolutionary Stability of the Multidivisional Form
Effectiveness of Multidivisional Form
Effectiveness of Multidivisional Form
Weaknesses of Multidivisional Form
Weaknesses of Multidivisional Form
Matrix Structure
Matrix Structure
Typical (Global) Matrix Structure
Typical (Global) Matrix Structure
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Organizational Design: Structure, Culture, and Control
Matching Global Strategy and Structure
Matching Global Strategy and Structure
LO 11-1 Define organizational design and list its three components
LO 11-1 Define organizational design and list its three components
Organizational Culture: Values, Norms, and Artifacts
Organizational Culture: Values, Norms, and Artifacts
Where Do Organizational Cultures Come From
Where Do Organizational Cultures Come From
How Does Organizational Culture Change
How Does Organizational Culture Change
Organizational Culture
Organizational Culture
Carly Fiorina appointed CEO of HP in 1999 Engineered acquisition of
Carly Fiorina appointed CEO of HP in 1999 Engineered acquisition of
Organizational Culture
Organizational Culture
LO 11-1 Define organizational design and list its three components
LO 11-1 Define organizational design and list its three components
Strategic Control and Reward Systems
Strategic Control and Reward Systems

Презентация: «Organizational Design: Structure, Culture, and Control». Автор: Anne Fuller, California State University. Файл: «Organizational Design: Structure, Culture, and Control.ppt». Размер zip-архива: 4092 КБ.

Organizational Design: Structure, Culture, and Control

содержание презентации «Organizational Design: Structure, Culture, and Control.ppt»
СлайдТекст
1 Organizational Design: Structure, Culture, and Control

Organizational Design: Structure, Culture, and Control

2 Part 3 Strategy Implementation

Part 3 Strategy Implementation

11–2

3 Zappos: Success through customer service Customer service all in-house

Zappos: Success through customer service Customer service all in-house

No scripts or timed calls Flat Organizational Structure = Flexibility Job rotation = trained talent 4 weeks of orientation training Including 2 weeks on customer service phones.

Chapter Case 11

Zappos: An Organization Designed to Deliver Happiness

11–3

4 Zappos’ Core Values

Zappos’ Core Values

EXHIBIT 11.1

11–4

5 11–5

11–5

6 LO 11-1 Define organizational design and list its three components

LO 11-1 Define organizational design and list its three components

LO 11-2 Explain how organizational inertia can lead established firms to failure. LO 11-3 Define organizational structure and describe its four elements. LO 11-4 Compare and contrast mechanistic versus organic organizations. LO 11-5 Describe different organizational structures and match them with appropriate strategies. LO 11-6 Describe the elements of organizational culture and explain where organizational cultures can come from the how they can be changed. LO 11-7 Compare and contrast different strategic control and reward systems.

11–6

7 How to Organize for Competitive Advantage

How to Organize for Competitive Advantage

Organizational design Goal is to translate strategies into realized ones Structure Processes Procedures Structure follows strategies Structure must be flexible Yahoo failed to make changes to their organizational structure. Jerry Young ousted in 2008.

11–7

8 Organizational Design: Structure, Culture, and Control
9 Organizational Design: Structure, Culture, and Control
10 Organizational inertia Resistance to change Often leads to failure

Organizational inertia Resistance to change Often leads to failure

because of the environmental dynamics: competition, technology, strategy…etc. Organizational strategy and structure are not static… But rather are dynamic! A tightly-coupled and coherent activity system that works well in a static environment may be subject to problems of inertia in a dynamic environment.

Organizational Inertia and the Failure of Established Firms

11–10

11 Organizational Inertia

Organizational Inertia

EXHIBIT 11.2

11–11

12 LO 11-1 Define organizational design and list its three components

LO 11-1 Define organizational design and list its three components

LO 11-2 Explain how organizational inertia can lead established firms to failure. LO 11-3 Define organizational structure and describe its four elements. LO 11-4 Compare and contrast mechanistic versus organic organizations. LO 11-5 Describe different organizational structures and match them with appropriate strategies. LO 11-6 Describe the elements of organizational culture and explain where organizational cultures can come from the how they can be changed. LO 11-7 Compare and contrast different strategic control and reward systems.

11–12

13 The Key Elements of Organizational Structure

The Key Elements of Organizational Structure

Organizational structure determines Work efforts of individuals and teams Resource distribution Key building blocks Specialization Formalization Centralization Hierarchy

11–13

14 The Key Elements of Organizational Structure

The Key Elements of Organizational Structure

Specialization: degree to which a task is divided Division of labor Example: U.S. Military (Army, Air Force, Navy, Marines) Formalization: codified rules and formal procedures Detailed written rules and policies Examples: NASA, McDonald’s

11–14

15 The Key Elements of Organizational Structure

The Key Elements of Organizational Structure

Centralization: where the decision is made Centralized decision making ? slow response time and reduced customer satisfaction Example: BP’s Mexican Gulf Oil Spill Hierarchy: formal, position-based reporting lines Tall structure vs. flat structure Tall structure? higher degree of centralization Flat structure ? lower degree of centralization Span of control

11–15

16 W. L. Gore & Associates: Informality and Innovation

W. L. Gore & Associates: Informality and Innovation

Bill Gore articulated 4 core values Fairness to each other Freedom to grow knowledge and skills Ability to make one's own commitments Consult with others before taking action W. L. Gore is organized in an informal and decentralized manner Empowered employees (no job titles, no job descriptions, informal team organization, soft reporting lines) Face-to-face communication All associates are shareholders of the company

STRATEGY HIGHLIGHT 11.2

11–16

1–16

17 Assembling the Pieces: Mechanistic vs

Assembling the Pieces: Mechanistic vs

Organic Organizations

Organic organizations Low degree of specialization and formalization Flat structure Decentralized decision making Uses virtual team due to information technology Examples: Zappos, W. L. Gore, and many high-tech firms Mechanistic organizations High degree of specialization and formalization Tall hierarchy Centralized decision making Example: McDonald’s

Video on Web 2.0 Changing workplace

11–17

18 Mechanistic vs

Mechanistic vs

Organic Organization

EXHIBIT 11.3

19 LO 11-1 Define organizational design and list its three components

LO 11-1 Define organizational design and list its three components

LO 11-2 Explain how organizational inertia can lead established firms to failure. LO 11-3 Define organizational structure and describe its four elements. LO 11-4 Compare and contrast mechanistic versus organic organizations. LO 11-5 Describe different organizational structures and match them with appropriate strategies. LO 11-6 Describe the elements of organizational culture and explain where organizational cultures can come from the how they can be changed. LO 11-7 Compare and contrast different strategic control and reward systems.

11–19

20 Matching Strategy and Structure

Matching Strategy and Structure

Simple structure Small firms with low complexity Top management makes all important strategic decisions Low degree of formalization and specialization A basic organizational structure Examples: small advertising, consulting, accounting, and law firms

11–20

21 Changing Organizational Structures and Increasing Complexity as Firms

Changing Organizational Structures and Increasing Complexity as Firms

Grow

EXHIBIT 11.4

22 Functional Structure

Functional Structure

Functional structure Groups of employees with distinct functional areas The areas of expertise correspond to distinct stages in the company value chain activities Example: College of Business, Finance Department , … etc. Recommended with narrow products/services Matches well with business-level strategy Cost leadership ? Mechanistic organization Differentiation ? Organic organization Integration strategy ? Ambidextrous organization

23 Typical Functional Structure

Typical Functional Structure

EXHIBIT 11.5

11–23

24 Matching Business Level Strategy and Structure

Matching Business Level Strategy and Structure

EXHIBIT 11.6

25 USA Today: one of the widest print circulations in U.S. USA Today

USA Today: one of the widest print circulations in U.S. USA Today

com, a new independent SBU under Gannett Although attracted readers and advertising dollars, USA Today.com lost key editorial talent due to uneven resource distribution Integration of USA Today and USA Today.com to eliminate duplication of resources and reduce waste

STRATEGY HIGHLIGHT 11.3

USA Today: Leveraging Ambidextrous Organizational Design

1–25

26 Functional Strategy: Drawbacks

Functional Strategy: Drawbacks

Lacks effective communication channels across departments Lack of linkage between functions Often solved the problems by having cross-functional teams It cannot effectively address a higher level of diversification

11–26

27 Multidivisional Structure

Multidivisional Structure

Multidivisional structure Consists of several distinct SBUs Each SBU is operationally independent Each leader of SBUs report to the corporate office Examples: Zappos is an SBU under Amazon Skype is an SBU under Microsoft Paypal is an SBU under eBay Companies using M-form structure GE, Honda

11–27

28 Organizing the Diversified Firm

Organizing the Diversified Firm

The multidivisional organization, as documented by Alfred D. Chandler in Strategy and Structure, was pioneered in the 1920s by pioneering firms such as: DuPont, General Motors, Sears and Standard Oil; By 1967, two-thirds of Fortune 500 Companies are multidivisional.

29 Organizational Design: Structure, Culture, and Control
30 Organizing the Diversified Firm

Organizing the Diversified Firm

Three key features of organizational structure: 1. The division of tasks; 2. The depth of the hierarchy (span of control); 3. The extent of authority delegation (how much decentralization?)

11–30

31 Typical M-Form Structure

Typical M-Form Structure

EXHIBIT 11.7

Functional Structure

Matrix Structure

11–31

32 Organizational Design: Structure, Culture, and Control
33 Multidivisional Structure

Multidivisional Structure

Use with various corporate strategies Related diversification Co-opetition among SBUs Transfer core competences across SBUs Centralized decision making Unrelated diversification Decentralized decision making Competing for resources

11–33

34 Matching Corporate-Level Strategy

Matching Corporate-Level Strategy

EXHIBIT 11.8

35 11–35

11–35

36 11–36

11–36

37 Evolutionary Stability of the Multidivisional Form

Evolutionary Stability of the Multidivisional Form

Parable of the Two Watchmakers 10,000 parts Watchmaker #1 needs to put all parts together or the watch falls apart and he needs to start all over with his 10,000 parts. Watchmaker #2 has developed 100 subsystems of 100 parts. This is the “principle of near-decomposability” (I.e., a system that contains localized sub-systems)

38 Evolutionary Stability of the Multidivisional Form

Evolutionary Stability of the Multidivisional Form

Hierarchical systems (containing sub-systems) will evolve much more rapidly from elementary constituents than will non-hierarchic systems containing the same number of elements. In organization theory this is called the effectiveness of “loose coupling.” The advantage of “loose coupling” is that if there is poor performance in division 2 it does not lead to failure of the entire system.

11–38

39 Effectiveness of Multidivisional Form

Effectiveness of Multidivisional Form

Effective Divisionalization involves: Identification of separable economic activities within the firm; Giving quasi-autonomous standing to each division (usually of a profit center nature); Monitoring the efficiency performance of each division; Awarding incentives; Allocating cash flow to high yield uses; and Performing strategic planning (diversification, acquisition, and related activities).

11–39

40 Weaknesses of Multidivisional Form

Weaknesses of Multidivisional Form

Dysfunctional Aspects of the Multidivisional: Emphasis on short-term perspective; Loss of economies of scope; Duplication of R&D, marketing, etc.; Emphasis on financial manipulation instead of developing firm capabilities and resources; and Large conglomerates may have excessive political power.

41 Matrix Structure

Matrix Structure

A combination of functional and M-form structure Creation of dual line of authority and reporting lines Each SBU receives support both horizontally and vertically Very versatile Enhanced learning from different SBUs

11–41

42 Typical (Global) Matrix Structure

Typical (Global) Matrix Structure

EXHIBIT 11.9

11–42

43 Organizational Design: Structure, Culture, and Control
44 Organizational Design: Structure, Culture, and Control
45 Matching Global Strategy and Structure

Matching Global Strategy and Structure

EXHIBIT 11.10

46 LO 11-1 Define organizational design and list its three components

LO 11-1 Define organizational design and list its three components

LO 11-2 Explain how organizational inertia can lead established firms to failure. LO 11-3 Define organizational structure and describe its four elements. LO 11-4 Compare and contrast mechanistic versus organic organizations. LO 11-5 Describe different organizational structures and match them with appropriate strategies. LO 11-6 Describe the elements of organizational culture and explain where organizational cultures can come from the how they can be changed. LO 11-7 Compare and contrast different strategic control and reward systems.

11–46

47 Organizational Culture: Values, Norms, and Artifacts

Organizational Culture: Values, Norms, and Artifacts

Organizational culture Collectively shared values and norms Value: what is considered important Norms: appropriate employee behaviors and attitudes Artifacts: expression of culture in items such as physical design, stories, and celebrations Socialization Internalize organization’s value and norms through interactions Think of Zappos’ core values GM’s culture became strategic liability

11–47

48 Where Do Organizational Cultures Come From

Where Do Organizational Cultures Come From

Founder imprinting Founders defined and shaped the culture Apple (Steve Jobs) Disney (Walt Disney) Microsoft (Bill Gates) Wal-mart’s “low cost” culture by Sam Walton Recruit people that fit the culture Zappos vs. GE

11–48

49 How Does Organizational Culture Change

How Does Organizational Culture Change

Core competency? core rigidity Culture no longer has good fit with the environment Cultural change is needed Cultural change Brings new leadership Mergers and acquisitions

11–49

50 Organizational Culture

Organizational Culture

Culture must be valuable, rare, inimitable, and non-substitutable (RBV) Causal ambiguity and social complexity Organizational culture is an important resource Southwest Airlines Friendly and energized employees work collaboratively Zappos Deliver WOW through service

11–50

51 Carly Fiorina appointed CEO of HP in 1999 Engineered acquisition of

Carly Fiorina appointed CEO of HP in 1999 Engineered acquisition of

Compaq in 2002 Carly Fiorina needed the acquisition to initiate structural and cultural change in HP to overcome inertia Board of Directors fired her in 2005 Hired Mark Hurd who was himself fired in 2010… Continued turnover at top of HP; Mark Hurd was replaced by Leo Apotheker, who in turn was replaced by Meg Whitman in September 2011.

Carly Fiorina at HP: Cultural Change via Shock Therapy

STRATEGY HIGHLIGHT 11.4

11–51

1–51

52 Organizational Culture

Organizational Culture

Cultural impact on employee behavior Motivates employees by appealing to their ideas Strengthen employee commitment, engagement, and effort Culture is vital to an organization Stronger founder imprinting leads to higher performance Effective alignment allows development and refines organizational core competency

11–52

53 LO 11-1 Define organizational design and list its three components

LO 11-1 Define organizational design and list its three components

LO 11-2 Explain how organizational inertia can lead established firms to failure. LO 11-3 Define organizational structure and describe its four elements. LO 11-4 Compare and contrast mechanistic versus organic organizations. LO 11-5 Describe different organizational structures and match them with appropriate strategies. LO 11-6 Describe the elements of organizational culture and explain where organizational cultures can come from the how they can be changed. LO 11-7 Compare and contrast different strategic control and reward systems.

11–53

54 Strategic Control and Reward Systems

Strategic Control and Reward Systems

Internal governance mechanisms Culture Sanctions Input controls Rules and standard operating procedures Budgets Behavior guidelines Output controls Result-oriented ROWEs (results only work environment)

Dan Pink’s RSA Video

11–54

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