useful models for organizational strategy€¦ · · 2017-05-24departmentalization or degrees and...

By Luis A. Martínez Author of:

14 December 2016

Useful Models for

Organizational Strategy

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Useful Models for Organizational Strategy

© Luis A. Martinez 2016

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Huh?

https://www.london.edu/faculty-and-research/lbsr/what-is-strategy-and-how-do-you-know-if-you-have-one#.WEmvdFwplvQ

Organizational (Oz) Strategy defined

What? How? Why?

Transformational Strategy – success stories

Evolving & Remaining Relevant over time

Some History

Structure and Culture

Assessment Tools and Process - it’s cyclical

Strategy spawns Tactical Plans

M&A Case Studies

The Future - Next Practices

Core Competencies and survival

Summary



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Emphasis: Ed.

‘What’ of Strategy

“An expression of how an organization needs to evolve,

over time to meet its objectives along with a detailed

assessment of what needs to be done.”

http://www.businessdictionary.com/definition/organizational-strategy.html#ixzz3li5f2nVE


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Strategic Plans

What? • Course of action to achieve long-range goals, 1 to 5 years, or more.

• Reflecting company’s

• Direction,

• Purpose,

• Mission Statement

• Using data from finance, operations, competitive environment


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“Management is doing things right;

leadership is doing the right things.”

Peter F. Drucker


How?

Organizational Model - Assessment Tool

Five questions (Peter F. Drucker):

What is our mission?

Who is our customer?

What does the customer value?

What are our results?

What is our plan?

Dynamic dichotomy – establish but adapt.

Peter F. Drucker


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Emphasis: Ed.

How?

“Developing an organizational strategy for a business involves

first comparing its present state to its targeted state to define

differences, and then stating what is required for the desired

changes to take place.



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Strategic plans influence development

of tactical plans.







How?

How will enterprise create long term value? • Scope: What activities will it participate in?

• Markets: What markets to address?

• Advantage: What are relevant competencies?

• Resources: What’s required to start up and compete?

• Environment: What are dynamic market factors?

• Stakeholders: Who are constituents affecting direction and activities?

Think Relevance

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9 © Luis A. Martinez

2016


Kongo Gumi

Since 578 AD Since 1136 AD

Why? To remain relevant.

Why OD?

Organizational Design seeks to:

• Integrate people, processes & technology towards business objectives

• Shape values, shared beliefs, norms of Ee’s

• Improve all communications (inbound / outbound)

• Optimize departmental interdependencies

• Identify / resolve quality & service delivery issues

• Improve business efficiencies

• Boost employee morale

• Enable customer satisfaction

• Remain relevant



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Why is relevance important?



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Business strategy must evolve over time

to meet its objectives

and remain relevant


From

Ma Bell

To 7 Baby Bells

1982

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2016

“Stay relevant, my friends.”


Secret Sauce?


2016


Transformational Strategies

Nokia cell phone in your pocket?

How old is Nokia?


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Finland 1865



• Wood pulp

• Basic minerals

• Rubber tires

• Bicycles

• Washing Machines

• Radios

• Electronics

• #1 in Cell Phones 2005

What happened ???

250,000,000

Nokia 1110

1960


2016



Nokia today

“Nokia acquired French company Alcatel-Lucent SA, the combination

making Nokia the second-largest player in the global networking sector.”

(Source: “Nokia Acquires Alcatel-Lucent, Integration to Start Soon,” Yahoo! Finance, January 5, 2016.)

$24,521,481,000. US Dollar

http://finance.yahoo.com/news/nokia-acquires-alcatel-lucent-integration-191507646.html



Why does Organizational Design and Development matter?



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Dynamic, Evolving Nature of OD Historical Perspectives

Person / position perspective

Historical Paradigm - Person was position

Job-shop manufacturing

• Blacksmith, baker, barrel maker, seamstress

• Communication channels informal

• Obstacles to expansion?

• Examples today?



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Industrial revolution’s paradigm shift • Mass production

• Interchangeable workers,

• Trained for specific tasks

• Communication becomes critical

Although complex, enabled fantastic growth



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Oz Design History

Frederick Taylor - US: scientific management, “one best way” to accomplish tasks, time / motion studies

Henri Fayol, France - structures for greatest efficiency, chain-of-command

Max Weber, Germany - authority ascribed to position



Outcome- vertically integrated, ordered, disciplined, task oriented,

top-down structures

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Influential writers - 50’s & 60’s Critical of prevalent top-down directive Oz

Alternatives - Maslow’s hierarchy of needs

Stressing employee self fulfillment, self actualization

Spawned Quality of Work Life movement to improve:

Business performance

Mission delivery

Business Growth



Abraham Maslow

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Maslow’s Effect on Quality of Work Life? Your Examples



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2016


21st Century Maslow

What about Structure?

“Organizational Structure refers to the way an organization [Oz]

arranges people and jobs so that its work can be performed

and its goals can be met.”

Reference for Business, Encyclopedia for Business, 2nd Ed.



Key words?

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20th / 21st Century

Organizational Structure Revolution

Think of:

• Functional

• Divisional

• Matrix

• R.O.W.E., Flatocracy, Holocracy, etc.

In common - Oz goals supersede individual interests



https://www.allbusiness.com/4-common-types-organizational-structures-103745-1.html/2

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Does Oz structure drive corporate culture? If so, how?



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2016


Corporate Culture Anthropologist

Organizational culture is

“A system of shared assumptions, values, and beliefs, which governs how

people behave in organizations. These shared values have a strong influence

on the people in the organization and dictate how they dress, act, and

perform their jobs. Every organization develops and maintains a unique

culture, which provides guidelines and boundaries for the behavior of the

members of the organization.”

http://study.com/academy/lesson/what-is-organizational-culture-definition-characteristics.html

Do all enterprises have an Oz culture?

Some Examples of Organizational


From: Family Owned –

• Family structure: socialism

• Culture of (farm, retail, restaurant, motel): tight

controls, task specialization, some delegation

• Small to medium: family controlled with professional

dedicated support staff



Since 1880’s Charles Corby Sr. and Jr.

Since 1930’s 28

Large private, incorporated or closely held

Wegman

Sands Golisano



Mary Catherine "Kitty" Van Bortel

Mann

What do we know about these cultures?

Dixon

Schultz

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Global Entity – Large, publicly held, iconic leaders



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Delegation?

Span of Control?

Empowerment?

Risk tolerance?

Results orientation?

Transaction driven?

Customer centric?

Organizational Culture – Compare & Contrast Characteristics



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Organizational structure

Components

1. Chain of Command

2. Span of Control

3. Centralization

4. Specialization

5. Formalization

6. Departmentalization

Or degrees and reciprocals of each…changing over time



https://blog.hubspot.com/marketing/organizational-structure-building-blocks#sm.0000rraparjm6e43q2m1eumirc3ky

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Choosing among tradeoffs -Your Choices?



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President

VP

Operations

Plant Mgr A

Plant Mgr B

Plant Mgr C

VP

Info

Technology

VP Finance

Dir.

Purchasing

VP

Engineering

Dir Product

Development

Mgr.

Maintenance

VP

Sales & Mktg.

Traditional Oz Structure

Characteristics: Vertically oriented chain of command, limited span of

control, centralized, task specialized, top down formal authority,

bureaucratic, “one best way”



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President

and

Creative Director

Media

Mind

Web

Architect

Accounting

Billing

Collections

Graphics

Guru

Print

Head

Design Firm



Characteristics?

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Departmentalization - Oz grouping basis •Functional

• Production, marketing, accounting, HR

•Geographic

• U.S., Western Europe, Pacific Rim

•Product

• Biomedical, digital, software, services

•Customer/Market

• Consumers, government, SOHO



http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html

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Functional basis - Examples

Manufacturing: production, marketing, accounting, sales, HR

Healthcare: Medical / surgical; finance; nursing; food service /

housekeeping; outpatient / ambulatory /emergent care, etc.

Advantage: Disadvantage:

Efficiency, effectiveness Narrow departmental focus



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Geographic basis

Multi National Enterprises (MNE) Significant presence in:

•U.S., Western Europe, South America, Asia, Middle East

•Performing under regional management

•Local focus & market relevancy

•Labor supply / cost advantages


Better coordination of activities Distance from main enterprise



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Product basis •Product based - large diversified conglomerates grouped by product

similarity

•Procter & Gamble, GE, Unilever, General Mills

•Semiautonomous operations - biomedical, digital, software, services


Product line focus, accountability Duplication of resources, redundancy



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Customer/Market basis •Organized and co-located by type of customer served.

•Products directed to end consumers, large business, regional /

state / federal government, SOHO, utilities, healthcare


Proficiency at meeting client

expectations

Duplication of resources, redundancy



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Functional?

Geographic?

Product?

Customer/market?

Choosing among tradeoffs -Your Choices? Why?



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“What got you here won’t get you there.” - Marshall Goldsmith

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Strategic Plans

How?

Six Steps

1. Current state

2. Desired state

3. Define Gap

4. Plan your work

5. Work your plan

6. Repeat


© Copyright: Luis A. Martinez 2011

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Beware of Linear Models!

Life is not linear.

It’s cyclical, asymmetric, with out of control spirals…

Start here: Success!

Example: DMAIC

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Organizational Model - Assessment Tool

• Systematic process to:

• Gather information about Oz

• Diagnose specific problems

• Develop solutions

• Tool Sample

• 360 reviews

• Employee satisfaction surveys

• Employee meetings

• Employee ombudsperson



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How?

Tactical Plans

Actions to achieve short-term goals (within fiscal year)

• Aligned to achieve strategic, longer-term goals

• Explain Business Units deliverables, resources, accountabilities

• Shorter time frames, narrower scopes

• Strategic and tactical plans - inseparable

Enterprise success relies on tactical plans

building on each other to achieve strategic plan.


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Desired outcome – Corporate Agility

• Alignment of: • Roles

• Responsibilities

• Accountabilities

• Within supportive Oz design

• In anticipation of disruptive technology, global developments!

• Deploy - Business Disruption Plan/Business Continuity Plan



Why? To remain relevant.

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Does Mission drive much of Oz culture & design?



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Oz culture pivots on mission -

What is business mission?

• Investment banking / finance?

• Community service?

• Manufacturing?

• Professional services?

What do each imply for Oz culture??



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Oz culture pivots on mission -

What is business mission? • Healthcare (acute)?

• Technology development & transfer?

• Property / casualty / life / health insurance?

• Local / county / state / federal government?



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Understanding Oz Models - What works?

Key to success – Balance

• Aligning functions, enhancing interdependencies

• Productive Tension – doers vs. checkers

• Balanced matrix • Senior leadership team

• Operations management

• Staff

• Employees

• Community stakeholders

• Shareholders



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How to strike balance? • Different for every company

• Different within each division / organization

• Highly determined by corporate culture

• Changes over time!

• Often derived from CEO or founder / icons • Sam Walton

• Freddie Smith

• Michael Dell

• Robert Wegman

• Tjerk de Ruiter

• Lauren Dixon



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How does culture affect success of M&A?



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M&A Case Study - Manufacturing model Exide Battery Corp. – low tech manufacturing multinational

• Closely held (Art Hawkins, CEO at 10%)

• Traditional pyramid, autocratic, volatile, resilient

• Maverick / cowboy culture (expected & prized!)

• Near Chapter 11 in 1985, acquired competitor May 27, 1987

• HR: turbulence – resurgence

• From Country Club to lean culture

• Turned around Exide Puerto Rico

• Grim Reaper to Santa Claus



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Case Study - Healthcare: Lehigh Valley Hospital

Merger of two competing community hospitals

• Old facility high touch - downtown • Maternity ward

• Outpatient clinics

• Psychiatry

• New facility high tech - suburban • Open heart

• Trauma center / Medevac /intensive care



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Merger objective: Integrate cultures •Process: Acquisition Integration - leverage cultures

•Identify best of each culture

•High Touch, face to face, accessible

•‘Round clock’ employee meetings

•Collaborative community gatherings

•In common – very high work ethic!

•Surrounded by unions

Today? #80 in Top 100 Best Places to Work



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2016


“Concepts such as agile manufacturing, just-in-time inventory

management, and ambidextrous organizations are impacting managers'

thinking about their organizational structure.”

The Future?

http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html

Artificial Intelligence:

“Your smartphone, your car, your bank, and your house all use artificial

intelligence on a daily basis…AI is everywhere, and it’s making a huge

difference in our lives every day.”

http://beebom.com/examples-of-artificial-intelligence/

What’s #1 occupation?


2016


R.O.W.E Results Oriented Work Environment http://workplaceflexibility.bc.edu/types/types_arrangement_results

Flatarchies

Self Managed Organizations

Holacracy http://www.tuw.edu/business/alternative-organizational-structures/

The Future?


Jan Koum

Founder

What’s App


Fred Smith –

Founder

FedEx

1 billion monthly active users

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Disruptive innovation

and Next Practices http://www.claytonchristensen.com/key-concepts/



Failing to Anticipate and Adapt

Core Competencies

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What did Kodak do after inventing digital camera?

Kept cashing checks for chemical film revenue, until…



“Cannibalize thyself, lest ye be cannibalized.” - Anonymous

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“There are few corporate blunders as staggering as Kodak’s

missed opportunities in digital photography, a technology that

it invented. This strategic failure was the direct cause of

Kodak’s decline and destroyed its film-based business model.”

- Chunka Mui, Forbes, 2012


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“Best way to manage change is to anticipate it.” © Copyright: Luis A. Martinez 2011



Follow the money - What did Xerox do? After inventing Personal Computer, Laser, mouse, GUI, Object Oriented

Programming, WYSIWYG - and The Internet ?

Kept cashing checks for analog copiers, until…

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What We Learned Organizational (Oz) Strategy defined

What is it? How to do? Why bother?

Transformational Strategies that worked

Importance of remaining relevant over time

History


Variety of assessment tools - it’s cyclical, not linear

Strategy & Tactical Plans - inseparable

M&A Case Studies

From ubiquity to - what’s next?

Recalibrating Core Competencies - for survival

References



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Stay relevant, my friends…

Remember!



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Keith Richards

Sources and References: Avery, Jim: How Xerox Invented the Information Age and Gave it Away, Cracked,

http://www.cracked.com/article_18807_how-xerox-invented-information-age-and-gave-it-

away.html

Deloitte Consulting, LLC, Boosting Business Performance Through Organization Design,

2008

Distelzweig, Howard and Droege, Scott B. Organizational Structure,Reference for

Business,Encyclopedia of Business, 2nd Ed.

Friedman, Thomas; The World is Flat – a Brief History of the Twenty-first Century, Farrar,

Straus and Giroux, New York, 2006

Grossman, Robert; New Competencies for HR, HR Executive, June 2007

Leader to Leader Institute: Drucker Foundation Self Assessment Tool, 5 Questions:

http://www.pfdf.org/tools/sat/questions.html

Marshall, Gordon; Organizational Design Movement – A Dictionary of Sociology, 1998.



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http://www.pfdf.org/tools/sat/questions.html

Gracias!

Special thanks to

Something for you…

Gratitude


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Client Organizations

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Luis A. Martínez, M.Ed.

What can I do for you?

Human Capital Strategy Partners PO Box 242 • Pittsford, NY 14534 • [email protected]

NEW YORK | MIAMI | DENVER

(585) 766-9536

www.HumanCapitalSP.com

@IAmLuisMartinez

Books available on Amazon.com

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http://www.humancapitalsp.com/

http://www.amazon.com/Getting-There-Luis-Mart%C3%ADnez/dp/1436340586/ref=ed_oe_p

useful models for organizational strategy€¦ · · 2017-05-24departmentalization or degrees and...

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