lecture 8

Implementation

Chapter 10

Chapter Road Map1. Differentiate between crafting and executing strategy2. Barriers to Strategy implementation3. Understand short term objectives and the qualities

of short term objectives4. Functional tactics and their application in strategy

implementation5. What policies are and their role in implementing

business strategies6. Use of financial reward in executive compensation7. Different types of executive plans

A second rate strategy perfectly executed will beat a first-rate strategy poorly executed every time

Richard M. Kovacevich: chairman and CEO Wells Fargo

Crafting the Strategy• Primarily a market-driven

activity• Successful strategy making

depends on– Business vision– Perceptive analysis of market

conditions and company capabilities

– Attracting and pleasing customers

– Outcompeting rivals– Using company capabilities

to forge a competitive advantage

Executing the Strategy• Primarily an operations-driven

activity• Successful strategy execution

depends on– Doing a good job of working

through others– Good organization-building– Building competitive

capabilities– Creating a strategy-

supportive culture– Getting things done and

delivering good results

Crafting vs. Executing Strategy

Barriers to Strategy Execution

• Subordinates to immediately abandon old ways• The needed actions and needed changes to occur in

rapid fire fashion• Skepticism of employees and managers regarding

the merits of a new strategy• Threatening to their departments and own careers • May have different ideas about what internal

changes are required to execute the strategy

Implementing a New StrategyRequires Adept Leadership

• Implementing a new strategytakes adept leadership to

– Convincingly communicatereasons for the new strategy

– Overcome pockets of doubt

– Secure commitment of concerned parties

– Build consensus and enthusiasm

– Get all implementation pieces in place and coordinated

Strategy execution requires every manager to think through the answer to “ What does my area have to do to implement its part of the strategic plan, and what should I do to get these things effectively and efficiently”

• Communicate the case for change• Build consensus on how to proceed• Arouse enthusiasm for the strategy to turn implementation

process into a companywide crusade • Empower subordinates to keep process moving• Establish measures of progress and deadlines• Reward those who achieve

implementation milestones• Direct resources to the right places• Personally lead strategic change process

and the drive for operating excellence

What Top Executives Have to Do inLeading the Implementation Process

Short-Term Objectives• Are measurable outcome achievable or intended to be

achieved in one year or less• They are specific, quantitative, results operating managers

set out to achieve at-least in three ways1. Short-term objectives operationalize long term objectives2. Discussion about agreement on short-term objectives help

raise issues and potential conflicts within organizations that usually require coordination to avoid dysfunctional consequences

3. Assist strategy implementation by identifying measurable outcomes of action plans or functional activities , which can be used to make feedback, correction, and evaluation more relevant and acceptable

Potential conflicting objectives and priorities

President

Marketing Finance and accounting Manufacturing

Responsibilities

Distribution ChannelsCustomer ServiceInventory obsolescence

Communications and data processingCarrying inventory

Production and supply alternativesWare housing

Objectives More inventory Less inventory

Frequent short runs Lower production runs

Fast order processing

Cheap order processing

Fast Delivery Lowest cost routing

Field warehousing

Less warehousing

Plant warehousing

Qualities of Effective Short-Term Objectives1. Measurable: are more consistent when they clearly state: What is to be accomplished When it will be accomplished How its accomplishment will be measured• Such objectives can be used to monitor both the

effectiveness of each activity and the collective progress across several activities

• Measurable objectives make misunderstanding less likely among interdependent managers who must implement action plans

• It is more easy to quantify objectives of line units than of certain staff areas

• Difficulties in quantifying objectives can be overcome by initially focusing on measurable activity and then identifying measurable objectives

Qualities of Effective Short-Term Objectives2. Priorities• Short –term objectives have to be prioritized because of timing

consideration or their particular impact on strategy• If such priorities are not established, conflicting assumptions

about relative importance may inhibit progress towards strategic effectiveness

• Priorities are established in various ways1. A simple ranking may be based on discussion and negotiation

during the planning process, This does not necessarily communicate the real difference in the

importance of the objectives so such terms as primary, top, and secondary may be used

2. Priorities may be set by assigning weights to establish and communicate the relative priority of objectives.

• What ever method, recognizing priorities is an important dimension in implementation value of short-term objectives

Qualities of Effective Short-Term Objectives3. Linked to long term objectives• Can add breadth and specificity in identifying

what must be accomplished to achieve long-term objectives

• The link between short-term and long-term objective should resemble cascade in key operation areas

• The cascading effect has the added advantage of providing a reference for communication and negotiation, which may be necessary to integrate and coordinate objectives and activities at the operating level

The Value added benefits of short-term objectives and action plans

1. They give operating personnel a better understanding of their role in the firms mission.

“Achieve Rs. 2.8 million in 2008 sales in Karachi territory

“Reduce average age of accounts receivable to 31 days by the end of 2008”

• Such clarity of purpose can be a major force in helping the firm’s “people asset”, more effectively, which may add tangible value

The Value added benefits of short-term objectives and action plans

2. Process development:• Provide a valid bases for addressing and accommodating conflicting

concerns that might interfere with strategic effectiveness• Meetings to set short-term objectives and action plans become the forum

for raising and resolving conflicts between strategic intentions and operating realities

3. Provide a basis for strategic control• Provide a clear, measurable basis for developing budgets, schedules,

trigger points and other mechanisms for controlling the implementation of strategy

4. Motivational pay-off• Short-term objectives and action plans that clarify personal and group

roles in the firm’s strategies and are also measurable, realistic, and challenging can be powerful motivators of managerial performance - particularly when these objectives are linked to the firm’s reward structure

Functional Tactics that implement business strategies

• Are key, routine activities that must be undertaken in each functional area to provide business product and services

• In a sense, functional tactics translate thought into action designed to accomplish specific short-term objectives

• Every value chain activity in a company executes functional tactics that support the business strategy and help accomplish strategic objectives

Differences Between Business Strategies and Functional Tactics

1. Time horizon• Identify activities to be undertaken “ now” or in the

immediate future• Business strategies focus on the firm’s posture three to

five years out• The shorter time horizon of functional tactics is critical to

the successful implementation of a business strategy for two reasons.

i. It focuses the attention of functional manager on what needs to be done now to make the strategy work

ii. It allows functional managers to adjust to changing current conditions


2. Specificity • More specific than business strategy• Identify the specific activities that are to be undertaken in each functional

area. • Allows managers to work out how their unit is expected to pursue short-

term objectives• Specificity in functional tactics contributes to successful implementation

by Helping ensure that functional managers know what needs to be done

and can focus on accomplishing results Clarifying for top management how functional managers intend to

accomplish the business strategy, which increases top managements confidence in and sense control over business strategy

Facilitating coordination among units within the firm by clarifying areas of interdependence and potential conflict


3. Participants • Different people participates in strategy development at the functional

levels• Business strategy is the responsibility of general manager of business unit• Development of functional tactics are delegated the head of functional

department• The general manager of business unit establish long-term objectives and

a strategy that corporate managers feels contribute to corporate level goals

• Key operating managers must establish short-term objectives and operating strategies that contribute to business-level goals

• Short-term objectives and functional tactics are approved through negotiations between business managers and operating managers

i. Involving operating managers in the development of functional tactics improves their understanding of what must be done to achieve long-term objectives and thus contributes to successful implementation

ii. It helps ensure that functional tactics reflect the reality of the day-to-day operating situation

iii. It can increase the commitment of operating managers to the strategies developed

Empowering Operating Personnel: The Role of Policies

• Providing service quality, customer satisfaction is not possible without empowering employees

• Empowerment is the act of allowing an individual or team the right and flexibility to make decisions and initiate action

• Training, self-managed teams, eliminating whole levels of management in organizations, and aggressive use of automation are some of the ways and ramifications of this fundamental change in the way organization functions

• Empowerment, however creates the need for decision making consistent with the business strategy and functional tactics

• One way to do this through the use of policies• Policies are directives designed to guide the thinking, and actions of

managers and their subordinates in implementing a firms’ strategy• Standard operating procedures or policies increases managerial

effectiveness by standardizing many routine decisions and clarifying the discretion managers and subordinates can exercise in implementing functional tactics

• Logically policies should be derived from functional tactics with key purpose of aiding strategy execution

Creating Policies That Empower • Policies communicate guidelines to decisions• They are designed to control decisions while defining discretion within

which operational personnel can execute business activities. They do so in several ways:

1. Policies establish indirect control over independent action2. Policies promote uniform handling of similar activities3. Policies ensure quicker decisions by standardizing answers to previously

answered questions that otherwise would recur and be pushed by management hierarchy again and again

4. Policies institutionalize basic aspects of organization behavior5. Policies reduce uncertainty in repetitive and day to day decision making,

thereby providing a necessary foundation for coordinated, efficient efforts and freeing operating personnel to act

6. Policies counteract resistance to or rejection of chosen strategies by organization members

7. Policies offer predetermined answers to routine problems8. Policies afford managers a mechanism for avoiding hasty and ill-conceived

decisions in changing operations

Creating Policies That Empower • Formal written policies have at-least seven advantages1. They require managers in think through the policy’s

meaning, content, and intended use2. They reduce misunderstanding3. They make equitable and consistent treatment of

problem more likely4. They ensure unalterable transmission of policies5. They communicate the authorization or sanction of

policies more clearly6. They supply a convenient and authoritative reference7. They systematically enhance indirect control and

organization wide coordination of the key purpose of policies

Executive Bonus Compensation Plans • The goal is to motivate executives to achieve maximization of shareholder

wealth• As per Agency theory the goal of shareholder wealth maximization is not

the only goal executive may pursue• Executives may choose actions that may increase their personal

compensation, power, and control• An executive compensation plan that contains that contains a bonus

component can be used to orient management’s decision making towards the owners’ goals

• The success of bonus compensation as an incentive hinges on a proper match between an executive bonus plan and a firm’s strategic objectives

• Five types of executive bonus plans that are most commonly used are:1. Stock Options2. Restricted Stock Options3. Golden handcuffs4. Golden Parachute5. Cash based on internal business performance using financial measures

Stock Options• A common measure of shareholder wealth creation is

appreciation of stock price• Stock options provide executives with the right to

purchase company stock at a fixed price in future• The precise amount of compensation is based on the

difference between the option’s initial price and its selling or exercised price

• As a result the executive receives bonus only if firm’s share price appreciates

• The reason for using options as compensation was the notion that they were essentially free.

• Although they diluted the shareholders’ equity when they were exercised, taking the cost of stock options as an expense against earnings was not required

Stock Options• Kept the earnings higher than he actual cost to the company and its

shareholders• Recent changes have encouraged expensing stock options• Research suggest that stock option plans lack the benefit of plans

that include true stock ownership• Provide unlimited upside potential for executive , but limited

downside risk because executive incur only opportunity cost• Because of the tremendous advantages to the executive stock

price appreciation there is an incentive for executive to take undue risk

• Supporters of stock ownership plans argue that direct ownership instills a much stronger behavioral commitment , even when the stock price falls, because it binds executives more than do options

• Executive options may be an efficient means to reduce management to undertake more risky projects

Restricted Stock• Designed to provide benefits of direct executive stock ownership • The executive is given a specific number of company stock shares• The executive is prohibited from selling the shares for a specified time period • Should the executive leave the firm voluntary before restricted period ends , the

shares are forfeited• Therefore, restricted stock option plans are form of deferred compensation that

promotes longer executive tenure than other types of plans• In addition to being contingent on a vesting period, restricted stock options may

also require achievement of predetermined performance goals• Price-vesting restricted stock plans tie vesting to the firms stock price in

comparison to an index or to reaching a predetermined goal or annual growth rate• If the executive falls short on some of the restrictions, a certain amount of shares

are forfeited• The design of these plans motivates the executive to increase the shareholder

wealth while promoting a long-term commitment to stay with the firm• Like stock options, restricted stock plans offer no downside risk to he executive

because shares were initially gifted to the executive • Unlike options, the stock retains value once ownership is fully vested.• Shareholders , on the other hand, do suffer a loss in personal wealth resulting

from a share price drop

Golden Handcuffs• Refer to either a restricted stock option plan, where stock

compensation is deferred until vesting time provisions are met, or to bonus income deferred in a series of annual installments

• This type may also involve compensating an executive a significant amount on retirement or at some predetermined age

• In most cases, payment is forfeited if the executive voluntary resigns or is discharged before certain time restrictions

• The golden handcuff approach is more congruent with long-term strategies than short-term performance plans, which offer little staying power

• Firms turn to golden handcuffs if they believe stability of management is critical to sustained growth

• Golden handcuffs may promote risk averseness in executive decision making due to huge downside risk to the executive

• This risk averseness may lead o mediocre performance results from executives’ decision

Golden Parachutes• Are form of bonus compensation that is designed to retain talented

executive• A golden parachute is an executive perquisite that calls for a

substantial cash payment if the executive quits, is fired, or simply retires

• The golden parachute may also contain covenants that allow the executive to cash in on non-invested stock compensation

• In cases of hostile takeovers where executives are often ousted these plans encouraged executives to take an objective look at take over offers by personally protecting themselves in he event of merger

• The parachute helps soften the fall of the ousted executive• By design golden parachute benefit top executives whether or not

there is evidence that value is created for shareholders• In fact research has suggested that since high performing firms are

rarely taken over, golden parachutes often compensate top executive for abysmal performance

Cash• Executive bonus compensation plans that focus on accounting measures of

performance• This type of plan is mostly associated with the payment of periodic cash bonuses• Market factors beyond the control of management, such as pending legislation,

can keep a firm’s share price repressed even though top executive is exceeding the performance expectation of the board.

• In this situation, a high performing executive losses bonus compensation due to under valued stock

• Accounting measures of performance correct for this problem by tying executive bonuses to improvements in internally measured performance

• Traditional accounting measures such as net income, earning per share, return on equity, and return on assets are used because they are easily understood, are familiar to senior management

• Critics argue that because of inherent flaws in accounting systems, basing compensation on these figures may not result in an accrate gauge of managerial performance

• Firms performance scheme, critics believe need o be based on financial measures that has true link to share holder value creation

• This issue led to Balanced Score Card which emphasizes not only financial measures , but also such measures as new product development, market share, and safety

Matching Bonus Plans and Corporate Goals1. Stock optionsi. Achieve corporate turnaround: executive profits

only if turnaround is successful in returning wealth to share holders

ii. Create and support growth opportunities : risk associated with growth strategies warrants he use of the high-reward incentive

iii. Globalize operations: risk of expanding overseas requires a plan that compensates only for achieved success

iv. Restructure organization: risk associated with major change in firm’s assets warrant the use of high –reward incentive

Matching Bonus Plans and Corporate Goals2. Restricted stock optionsi. Increase assets under management: executive

proportionally as asset growth leads to long-term growth in share price

ii. Stream line operations: rewards long-term focus on efficiency and cost control

3. Golden Parachute:i. Defend against unfriendly takeover: parachute

helps takeover remove temptation for executive to evaluate takeover based on personal benefits

ii. Evaluate suitors objectively: parachute compensates executives if job is lost due to a merger favorable to the firm

Matching Bonus Plans and Corporate Goals5. Golden handcuffs:i. Reduce executive turnover: handcuffs provide

executive tenure incentive6.Cashi. Grow share price incrementally: accounting

measures can identify periodic performance benchmarks

ii. Improve operational efficiency: accounting measures represent observable and agreed upon resources of performance

Organizational Structure

Chapter 11

Chapter Roadmap

• Five traditional organizational structures• Product team structure• Improvements sought in traditional

organizational structure• Agile, organizations• Boundary-less organization • Ambidextrous learning organization

Traditional Organization structure1. Simple organization structure• Entrepreneurial stage : Small business, few employees, informal arrangements of tasks, responsibility,

and communication, accomplished through direct supervision All strategic and operational decisions are made by the owner Strategic concern primarily survival Maximizes owner’s control Rapidly respond to market/ market shift and the ability to accommodate unique

customer demands without major coordination difficulties Encourages employees to multitask They are efficacious in business that serve simple, local product/ market or

narrow niche The simple structure can be very demanding on the owner manager If successful and starts to grow, this can cause the owner manager to give

increased attention to day to day concerns at the expense of time invested in stepping back and examining strategic questions about company’s future

Company’s reliance on the owner as central point for all decisions can limit the development of future managers capable of assuming duties that allow owner to be strategist

The structure usually requires a multitalented resourceful owner, good at producing and selling a product or service and at controlling funds

Traditional Organization structure2. Functional structure Tasks, people, and technologies necessary to do the work of the business are

divided into separate functional groups Formal procedures for coordinating and integrating their activities to provide

products and services Predominant in firms with a single or narrow product focus Requires well defined skills and areas of specialization to build competitive

advantages in providing their products or services Dividing task into functional specialties enables the firm to concentrate on only

one aspect necessary work This allows use of latest technical skills and develops a high level of efficiency The strategic challenge presented by the functional structure is the effective

coordination of functional units The narrow technical expertise achieved through specialization lead to limited

perspectives and to differences in priorities of functional units Specialists may see the firm’s strategic issues primarily related to their functional

areas The potential conflict between units makes the coordinating role of CEO critical. The integrating devices such as project teams or planning committees are

frequently used in functionally organized firms to enhance coordination and to enhance communication and understanding across functional units

Copyright 2004 Prentice Hall 50

Functional Structure

Functional structureStrategic Advantages Strategic Disadvantages

1. Achieves efficiency through specialization

2. Develops functional expertise

3. Differentiates and delegates day to day operating decisions

4. Retains centralized control of strategic decisions

5. Tightly links structure to strategy by designing key activities as separate units

1. Promotes narrow specialization and functional rivalry or conflict

2. Creates difficulties in functional coordination and inter-functional decision making

3. Limits development of general managers

4. Has strong potential for inter-functional conflict- priority placed on functional areas, not the entire business

5. May cost more to do a function than it does “ outside” the company unless outsourced

Divisional Structure• When a firm diversifies its products or service lines, covers broad

geographic areas, utilizes unrelated market channels , or begins to serve heterogeneous customer group, a functional structure becomes inadequate

• This structure is necessary to meet the increased coordination and decision making requirements

• Set of relatively autonomous units or divisions, are governed by a central corporate office but each operating division has its own functional specialists who provide products or services different from those of other divisions

• Allows corporate management to delegate authority for the strategic management of distinct business entities

• This expedite decision making in response to varied competitive environments and enables corporate management to concentrate on corporate level strategic decisions

• The division is usually given profit responsibility


Multidivisional Structure


Geographic Structure


Market Structure

Geographical Structurefor Apple Computer

CEOSteve Jobs

AppleEurope

ApplePacific

France

AppleProducts

Asia

Japan

Australia

AppleAmericas

Canada

Latin America/Caribbean

SalesService andMarketingto Regions

Source: www.apple.com

Global Geographic Division Structure

CEO

PacificDivision

EuropeanDivision

Latin AmericanDivision

CanadianDivision

CorporateStaff

Long-termPlanning

ProductCoordinators

Partial Global Product Structure Used by Eaton Corporation

Engineering

President

International

Law &CorporateRelations

Chairman

Finance & Administration

RegionalCoordinators

Global AutomotiveComponents

Group

GlobalIndustrial

Group

GlobalInstruments

ProductGroup

GlobalMaterialsHandling

Group

GlobalTruck

ComponentsGroup

Divisional structureStrategic Advantages Strategic Disadvantages

1. Forces coordination and necessary authority down to the appropriate level for rapid response

2. Places strategy development and implementation in closer proximity to the unique environments of the division

3. Frees CEO for broader strategic decision making

4. Sharply focuses accountability for performance

5. Retains functional specialization within each division

6. Provides good training ground for strategic managers

7. Increases focus on products, markets, and quick response to change

1. Fosters potentially dysfunctional competition for corporate level resources

2. Presents problems of determining how much authority should be given to division managers

3. Creates a potential for policy inconsistencies among divisions

4. Presents the problem of distributing corporate overhead costs in a way that is acceptable to division managers with profit responsibility

5. Increases costs invurred through duplication functions

6. Creates difficulty maintaining overall corporate image

Strategic Business Unit (SBU)• The SBU structure is an adaptation of the of

the divisional structure whereby various divisions or parts of division are grouped together based on common strategic elements, usually linked to distinct product/ market differences

• The advantages and disadvantages of SBU form is very similar to divisional structures

Matrix Structure• Matrix structure is one in which functional and staff personnel are

assigned to both a basic functional area and to a project• It provides dual channels of authority, performance, responsibility,

evaluation, and control• The matrix structure is intended to make the best use of talented people

within a firm by combining the advantages of functional specialization and product specialization

• The matrix structure also increases the number of middle managers who exercise general manager responsibilities ( through the project manager role) and thus broaden their exposure to organization wide strategic concerns

• Matrix structure overcomes a key deficiency of functional organization while retaining the advantage of functional specialization

• It is difficult to implement• Dual chain of command challenges fundamental organizational

orientation• Negotiating shared responsibilities, the use of resources, priorities can

create misunderstanding or confusion among subordinates


Matrix Structure

Global Matrix StructureInternational

ExecutiveCommittee

PowerTransformers

Germany NorwayArgentina/

BrazilSpain/

Portugal

Transportation

Industry

BusinessAreas

Country Managers

LocalCompanies

Matrix StructureStrategic Advantages Strategic Disadvantages

1. Accommodates a wide variety of project oriented business activities2. Provide good training ground for strategic managers3. Maximizes efficient use of functional managers4. Fosters creativity and multiple sources of diversity5. Give middle managers broader exposure to strategic issues

1. May result in confusion and contradictory policies

2. Necessitates tremendous horizontal and vertical coordination

3. Can proliferate information logjams and excess reporting

4. Can trigger turf battles and loss of accountability

Product Team Structure• Emphasize lateral rather vertical relationships• All functions necessary to produce a product or

services are placed in a common unit usually managed by some one called process owner

• Few hierarchical levels, and senior executive team is relatively small

• Eliminate many hierarchical and departmental boundaries that can impede coordination, decision making and task performance

Teams are key organizing feature in the process Manage everything from task execution to

strategic management• Primary goal is customer satisfaction

The Process-Based Structure

Developing New Products ProcessP rocess O w n er

C ross F u n c tion a l Team M em b ers

Acquiring and Filling Custom er Orders ProcessP rocess O w n er


Supporting Custom er Usage ProcessP rocess O w n er


Senior M anagem ent TeamC h a ir an d K ey S u p p ort P rocess O w n ers

A Horizontal Structure

Team3

Team2

Team1

TopManagement

Team

Team3

Team2

Team1

Customer

Customer

ProcessOwner

ProcessOwner

Testing Product Planning

Research Market

Analysis

New Product Development Process

Distrib. Material

Flow Purchasing Analysis

Procurement and Logistics ProcessSources: Based on Frank Ostroff,The Horizontal Organization, (New York:Oxford University Press, 1999); John A. Byrne,“The Horizontal Corporation,” Business Week, December 20, 1993, 76-81; and Thomas A. Stewart,“The Search for the Organization of Tomorrow,”Fortune, May 19, 1992, 92-98.

Organizational Structure for 21st Century• Successful organizations once required: internal focus Structural interaction Self efficiency A top down approach• 21st century organizational structure reflects an: An external focus Flexible interaction Interdependency Bottom up approach• Three fundamental trends are driving decisions about effective

organizational structures in the 21st century 1. Globalization2. Internet3. Speed of decision making

Creating Agile, Virtual organizations• 21st century corporations will increasingly see their structures

become an elaborate network of external and internal relationship. • This organizational phenomenon has been termed the Virtual

organization• Virtual organization is a temporary network of independent

companies – suppliers, customers, subcontractors, even competition – linked primarily by information technology to share skills, access to markets, and costs

• An Agile organization is one that identifies a set of business capabilities central to high profitability operations and then builds a virtual organization around those capabilities, allowing agile firm to build its business around the core, high profitability information, services, and products

• Creating an agile virtual organization structure involves outsourcing, strategic alliances, a boundaryless structure, an ambidextrous learning approach , and Web based organizations

Outsourcing: creating Modular Organization

• Choosing to outsource activities has been linked to creating modular organization

• A modular organization provides products or services using different self contained specialists or companies brought together – outsourced – to contribute their primary or support activity to result in a successful outcome

• These outsourced providers are independent companies, many of which offer similar services to other companies including competitors

The Network Organization

DesignerOrganizations

SupplierOrganizations

BrokerOrganization

ProducerOrganizations

DistributorOrganizations

Business Process Outsourcing (BPO) • BPO is most rapidly growing segment of the

outsourcing industry world wide• BPO includes a broad array of administrative

functions – HR, supply procurement, finance and accounting, customer care, supply chain logistics, engineering, research and development, sales and marketing, facilities management, and training and development

Towards Boundaryless Structures• Jack Welch coined the word boundaryless

organization to characterize his vision of what he wanted GE to be able to generate knowledge, share knowledge , and get knowledge where it could be best used to provide superior value

• A key component of this concept was erasing internal divisions so the people in GE could work across functional, business, and geographic boundaries to achieve integrated diversity

• The ability to transfer the best ideas, the most developed knowledge, and the most valuable people quickly, and freely throughout GE

Towards Boundaryless Structures• Boundaries or borders arise in four directions, based on the

ways we traditionally structure and run organizations1. Horizontal Boundaries: Between different departments2. Vertical Boundaries: between operations and management3. Geographic Boundaries: between different physical

locations4. External interface boundaries between a company and its

environment• Outsourcing, strategic alliances, product team structures,

reengineering, restructuring are all ways to move towards organization

• Culture and shared values across all organizations that value boundaryless behavior and cooperation help enable these efforts to work

Towards Boundaryless Structures• Globalization and Technology particularly driven by internet have

been and will be major driver of the boundaryless organization• The Web’s contribution electronically has simultaneously become

the best analogy in explaining future boundaryless organization• It is not the Web as in internet but weblike shape of successful

organization structure• If there are a pair of images hat symbolize the vast changes a

work , they are pyramid and web• The 21st century corporation is far more likely to look like a web: a

flat, intricately woven form that links partners, employees, external contractors, suppliers, and customers in various collaborative networks

• Players will grow more and more interdependent• Fewer companies will ry to master all disciplines to produce and

market their goods• Managing this intricate network of partners, will be as important

as managing internal operations

Ambidextrous Learning Organization • Learning organization: organizations structured around the idea that it should be

set up to enable learning, to share knowledge, to seek knowledge, and to create opportunities to create new knowledge.

It would move into new markets to learn about those markets rather than simply to bring a brand to it, or find resources to exploit in it

• Ambidextrous organizations : Organization structure most notable for its lack of structure

wherein knowledge and getting it to the right place quickly is the key reason for organization. Managers become knowledgeable nodes through which intricate networks of personal relationships inside and outside the formal organization are constantly and often informally coordinated to bring together relevant know-how and successful action

lecture 8

Documents

strategy implementation3

strategy implementation5

strategy managements

new strategythreatening

executing strategybarriers

implementation pieces

company capabilitiesattracting

coordinatedstrategy