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Strategy and Design

Business Organisation 2012


Robert Westwood

Reading
Daft et al (2010) Chapter 2

Jarzabkowski, P. (2005) Strategy as Practice: A New Perspective. In P. Jarzabkowski Strategy as Practice: An Activity Based Approach. Pp. 1- !. "on#on$%a&e.

'a(el, ). * Prahal#, C.+. (2005) %trate&i, Intent. Harvard Business Review The Magazine http://h r.org/!""#/"$/strategic%intent/ar/& online -ersion, a,,esse#, 12.10.2012.

Objectives
On completion of t is module you will be able to!
#efine an# #es,ribe strate&/ e0plain #ifferent approa,hes to strate&/ e0plain the ,on,epts of strate&i, thinkin&, an# strate&i, ali&n(ent an# realisation #es,ribe an# 1se so(e (o#es of anal/sis rele-ant to the strate&/ pro,ess 1n#erstan# the relationship of strate&i, ,han&e to or&anisational ,1lt1re, str1,t1re an# other or&anisational s/ste(s

" e Role of Strategic Direction in Organi#ation Design $t e te%tboo& says'''(


Organi#ation design is 1se# to i(ple(ent &oals an# strate&/ an# thereb/ infl1en,es the prospe,ts of s1,,ess.

21t...or&anization #esi&n is not alwa/s a rational pro,ess whi,h in-ol-es ,aref1l ,al,1lation an# pro,ee#s s(oothl/ thro1&h a series of sta&es. In fa,t, the #esi&n of an or&anization is a politi,al pro,ess in whi,h establishe# ro1tines an# -este# interests are ,hallen&e# an# #efen#e#.

Overview ) Organi#ation conte%t*


strategy* design and effectiveness

1' " in&ing about strategy''' W at is strategy+

It is a plan for intera,tin& with the ,o(petiti-e en-iron(ent. 3ana&ers (1st sele,t spe,ifi, strate&/ an# #esi&n options in or#er to a,hie-e offi,ial an# operati-e &oals within its ,o(petiti-e en-iron(ent.

1' " in&ing about strategy''' W at is strategy+


Vision & Business Model What we do Where well play Why were unique General financial goals Strategy Execution

How well do it
- Market focus - Product portfolio - Value chain participation - Brand positioning - Alliances

Do it!
- Org Structure - Business processes - Systems - KPIs

Corporate Strategy

Operational Strategy

PricewaterhouseCoopers

" e strategy disconnect


Disconnect Disconnect

Business Model

Strategy

Execution

However, there are often disconnects in the flow: People often call their business model a strategy they have no strategy or in other words they dont know how they will win If the business model cannot be translated into a strategy there is no way to win The strategy does not provide enough detail for execution

PricewaterhouseCoopers

" e ,lanning ,rocess


Vision & Business Model Key Elements Vision & Business Model
What are we? What do we want to be? What are our main objectives Nature of competitive advantage Market focus Action/investment priorities Risks/uncertainties Goals/expected performance Organisation structure Departmental functional objectives Financial expectations Plan for performance monitoring Contingencies Cultural Change programs Change Coordination/integration plan Departmental/functional actions Responsibilities Timetables Detailed budgets Results monitoring and feedback

Strategy

Plans Update Frequency


Very Rarely

Budgets/Milestones Key Participants


CEO/Board/ Key Officers

Strategic Plan

2-4 years

Officers/VPs/ Senior Managers

Business Plan

Yearly

Senior Managers/ Junior Managers

Budgets/ Milestones

Quarterly

Junior Managers/ Staff

-etwor&ing of .issions* Objectives* and Strategies


Level 1
Corporate-Level Managers
Corporate-wide Strategic Vision
Two-Way Influence

Corporate Level Objectives


Two-Way Influence

Corporate Level Strategy


Two-Way Influence

Level 2
Business-Level Managers

Business Level Strategic Vision


Two-Way Influence

Business Level Objectives


Two-Way Influence

Business Level Strategies


Two-Way Influence

Level 3
Functional Managers
Functional Missions
Two-Way Influence

Functional Objectives
Two-Way Influence

Functional Strategies
Two-Way Influence

Level 4
Plant Managers, Lower-Level Supervisors
Operating Missions Operating Objectives Operating Strategies

Cascading Strategy

GLOBAL STRATEGY

BALANCED SCORECARD

PMP Performance Management FEEDBACK

C&DP

OCI/LSI Culture & Individual Development

Career Development

360 Feedback Culture

BHC ANZ Human Resources SCORECARD


SHAREHOLDER Deliver profitable growth above market rates
Keep within BHC budget and review variances monthly at HR Meetings. (MT) Develop an Employee Value Proposition as part of the Employment Branding strategy linked to consumer branding by 30/9/06 (LS & ALL) Measure and communicate Leave Days Accrued (LDA) and cost implications by business group quarterly (x4 per year): First report due to EC meeting by January 06 highlighting cost implication with April 1 2006 Salary Increase. (CW) Develop a Remuneration Strategy for BHC - Conduct a Remuneration Review and determine the competitiveness of all BHC roles and salaries including industry comparisons of base, incentives and total package Q2. Determine the most appropriate salary data (surveys) to use for industry benchmarking for BHC roles Q2. Develop a BHC Remuneration Philosophy i.e. Do we target the 75th percentile for all roles? Implement WorkChocies initiatives leave, payroll and other changes

CUSTOMER Become Partner of Choice


Strengthen customer relationships professional development by: Run 1 day Career Coach/Career Mapping program for CC Managers by August (1 NSW) (JMM) Run 0.5 half day Career Mapping/CDP Consolidation training for people managers AH,PH,DS by 30/5/06 (1 Vic, 1 NSW) (SF) Training all CC & new managers on Coaching for Optimal Performance (2x2 day sessions Vic & NSW) by July (SF/SW/JMM) Compliance: roll out updated GWR to all employees by Dec 06 (LS/New L&D) Integrate findings from OCI/OEI/Hewitt findings and make recommendations to enhance culture and Hewitt engagement score by end Q3 (MT/SF/LS) Monitor completion of PAS x 2 each per employee (Feb/Aug) & CDP x 2 (May/Oct) (All HR Mgrs) Support growth of desired Bayer culture by: Develop, design and run 3 new HR breakfast topics by Dec 06, Interpersonal Awareness Q1 (SF) (Impact & Influence Q3 (JMM) & Delivering Results/Achievement) Q4 (CR) - (SW/ - driver & communication/ALL)

LEADERSHIP/PEOPLE Motivate for Success Consolidate & Communicate


Completion of PAS x 2 utilising new PMP format (Feb/Aug) (All) Completion of CDP x 2 per(May/Oct) (All HR) Facilitate & monitor completion Talent Management process x 2 (1H/2H) (HRMgrs) Social Responsibility Program each BHC HR member vounteers 1 GIVE day by 30/12/06 (All) Develop induction course on key business & HR processes for new managers by July (SF & new L&D Mgr) Roll out new Bayer Leadership Principles (HRMs) & develop new PMP for staff (2007 system) and provide education to all managers & staff Q4. (LS&SF&MT)

ORGANISATIONAL EFFECTIVENESS Optimise Simplify - Innovate


Leverage BHC Strength Implement HR Communication and Marketing Plan by Dec 12 (JMM) HR team eligible for company vehicle to participate in Defensive Driving compliance by Q4. Provide input to produce HR IS strategy in conjunction with O & I to improve reporting mechanisms including CDP/PAS by end June (JMM/CW) Create a Payroll/HRIS Road Map for Bayer Australia - Strategy for HRIS developed and approved by BHC EC & CGC July 12th. - Implementation of core Payroll processes Payroll Q4 Support DS in HR requirements for ISO 9001 Accreditation by end Oct 06

Ot er " in&ing 2bout Strategy /ive 0,1s1 of Strategy ) .int#berg


%trate&/ as Plan (Desi&n) Cons,io1sl/ inten#e# ,o1rse of a,tion %trate&/ as Plo/ %pe,ifi, (anoe1-re to o1twit opponents Pattern in a strea( of a,tions Position in relation to or&anisation4s en-iron(ent 5r&anisation4s share# (in#set

%trate&/ as Pattern

%trate&/ as Position

%trate&/ as Perspe,ti-e

2n emerging strategy
Actions to diversify Actions to strengthen resources & capabilities How functional activities are managed Efforts to pursue new opportunities or defend against threats Actions to outcompete rivals Responses to changing external circumstances Actions to alter geographic coverage Actions to merge or acquire rival companies

Pattern of Actions That Define Strategy

Actions to form strategic alliances and collaborative partnerships

Strategic ,at ways


Strategy as outcome
(a cultural or political perspective)

Imposed strategy
(positioning in relation to environment) 5. Planned or Emergent

3. Planned

4. Emergent strategy (a pattern in a stream of actions) . !eli"erate# planned strategy implementation

Intended strategy

Realised Strategy

$. Planned

Unrealised strategy

3ore 4lements 6or(1latin& strate&i, intent I(ple(entin& strate&i, ,han&e

2' /ormulating Strategy


7 pro,ess b/ whi,h (ana&ers anal/se their or&anisation an# its en-iron(ent in or#er to #e,i#e what the strate&/ sho1l# be

8wo approa,hes
%trate&i, plannin& - rational, bl1eprint approa,h %trate&i, thinkin& - strate&i, (ana&e(ent, (ore int1iti-e an# e(er&ent

/ormulate or ,ic& a Strategy+ .odels for pic&ing strategies! Porter4s 6i-e 6or,es * 3iles an# %now4s %trate&/ 8/polo&/
9a,h pro-i#es a fra(ework for ,o(petiti-e a,tion

3lassic Strategy and Design "ypologies

,orter1s 3ompetitive Strategies $t%tb& p' 56)71(


" ree competitive strategies (1) 8ow cost leaders ip! this strate&/ tries to in,rease (arket share b/ e(phasizin& low ,ost ,o(pare# to ,o(petitors (e.&. :/anair; 3,Donal#s). (2) Differentiation! or&anizations atte(pt to #istin&1ish their pro#1,ts or ser-i,es fro( others in the in#1str/ (e.&. 'arle/-Da-i#son; :ole0 wat,hes). ( ) /ocus9Segmentation! 'ocused (ow cost an# 'ocused di''erentiation. 8he or&anization ,on,entrates on a spe,ifi, re&ional (arket or b1/er &ro1p (e.&. P1(a; )lobe).

,orter1s 3ompetitive Strategies

.iles and Snow1s Strategy "ypology $see t%tb&' ,p' 71)7:(


Prospector
"earnin& orientation; fle0ible, fl1i#, #e,entralize# str1,t1re <al1es ,reati-it/, risk-takin&, an# inno-ation

Defender
9ffi,ien,/ orientation; ,entralize# a1thorit/ an# ti&ht ,ost ,ontrol 9(phasis on pro#1,tion effi,ien,/, low o-erhea#

Analyzer
2alan,es effi,ien,/ an# learnin&; ti&ht ,ost ,ontrol with fle0ibilit/ an# a#aptabilit/ 9(phasis on ,reati-it/, resear,h, risk-takin& for inno-ation

Reactor
=o ,lear or&anizational approa,h; #esi&n ,hara,teristi,s (a/ shift abr1ptl/ #epen#in& on ,1rrent nee#s

"raditional ,lanning 2pproac es


Define strate&i, ob>e,ti-es (in line with (ission) 7nal/se the or&anisation%s internal an# e0ternal strate&i, position & ,o(petiti-e position :e-e-al1ate what the or&anisation hopes to a,hie-e %et spe,ifi, lon& ter( ob>e,ti-es Consi#er alternate plans to a,hie-e those ob>e,ti-es 9-al1ate an# sele,t (ost -iable plan 7llo,ate reso1r,es to i(ple(ent the plans I(ple(ent the plan 3onitor the a,hie-e(ent of ob>e,ti-es

3riti;ue of "raditional 2pproac es


7ss1(es a pre#i,table, stable en-iron(ent. 7ss1(es pre#i,table f1t1re. 90trapolation not -iable in ti(es of #is,ontin1o1s ,han&e. 5-erl/ rational & sees the pro,ess as ti#/ an# linear & separates for(1lation an# i(ple(entation. =e&le,t of the politi,al an# so,iall/ ,onstr1,te# nat1re of strate&/ for(1lation 7ss1(es pro,ess ,an be ,ontrolle# & thro1&h (eas1re(ent s/ste(s Plans be,o(e en#s in the(sel-es Pro,ess -iews - strate&/ as politi,al pro,ess, strate&/ as lo&i,al in,re(entalis(, strate&/ as e(er&ent, strate&/ as sense(akin&

" e S ift to Strategic " in&ing


%trate&i, Plan
fo,1s on ?1antitati-e anal/sis rational an# anal/ti,al e(phasises e0istin& reso1r,es an# ,apabilities en-iron(ent -iewe# as &i-en an# #eter(inisti, o1t,o(e is a plan a#opte# b/ (ana&e(ent strate&/ as a rational #eter(ine# pro,ess

%trate&i, 8hinkin&
in,l1#es ?1alitati-e anal/sis ,reati-e an# int1iti-e e(phasis on or&anisational possibilities re#efinin& the r1les . reshapin& the en-iron(ent o1t,o(e is a share# strate&i, intent strate&/ as a so,iall/ ,onstr1,te#, politi,al pro,ess

:' <mplementing Strategic 3 ange

3ake the strate&/ a li-e# realit/

@ %trate&i, ali&n(ent @ %trate&i, realisation

Strategic 2lignment
7li&nin& strate&i, #ire,tion with str1,t1re, ,1lt1re an# other or&anisational s/ste(s. 7n holisti,, s/ste(s -iew %trate&i, ali&n(ent is the pro,ess b/ whi,h the -ario1s or&anisational ,o(ponents are (a#e to 'fit% or ali&n with the strate&/ 3a/ in-ol-e ,han&e to all s1b-s/ste( ele(ents 8hese ele(ents an# the ,han&es to the( (1st also be ,oherent

Strategic Realisation
8he pro,ess b/ whi,h the strate&i, intentions are realise# 5r&anisational a,tions nee# to fall into a new pattern base# on a new 1n#erstan#in& 2eha-io1r is ,han&e# to a,t in a,,or#an,e with the new strate&/

Strategy)as),ractice
%trate&/-as-Pra,ti,e is a relati-el/ new perspe,ti-e. It fo,1ses on how strate&ists a,t1all/ do strate&/. Dissatisfie# with tra#itional perspe,ti-es A whi,h ten# to be pres,ripti-e - the ,entral tenet is an 1n#erstan#in& that the stren&th of (i,ro a,ti-ities of strate&/ A ,o((onl/ known as strate&/ pra,ti,es A is what separates perfor(ers fro( non-perfor(ers.

8his a,ti-it/ base# -iew of strate&/ (Bhittin&ton, Johnson, 3elin 200 ), has taken on the task of lookin& at the ChowD of strate&/ to balan,e the well resear,he# CwhatD 3i,ro a,ti-ities - :oos an# <on +ro&h stress in their ,ase st1#/ of (e#ia fir(s that the o1t,o(e of the strate&/ pro,ess #epen#s to a &reat e0tent on fa,tors like Cwho talks to who(, wh/ the/ talk, what the/ talk abo1t, an# when these ,on-ersations take pla,eD (:oos an# <on +ro&h 1EEF in 'en#r/ an# %ei#l 200 ).

S2,
%trate&/ as pra,ti,e is part of a broa#er pra,ti,e t1rn in ,onte(porar/ so,ial theor/ an# the (ana&e(ent s,ien,es o-er the past 20 /ears. It re,o((en#s that we fo,1s on the a,t1al work of strate&ists an# strate&izin&. It ar&1es, in#ee#, that #espite so(e G0 /ears of strate&i, (ana&e(ent resear,h, we still la,k a -ali# theor/ of how strate&ies are ,reate# ('a(el, 2001). It seeks (ore Hh1(anize#4 theories that brin& a,tors an# a,tion ba,k into the resear,h fra(e (Bhittin&ton, 2002).

=ar#ab&ows&i Pra,ti,e resear,h ai(s to 1n#erstan# the (ess/ realities of #oin& strate&/ as li-e# e0perien,e; to &o insi#e the worl# of strate&/ pra,titioners as the/ str1&&le with ,o(petin& priorities, (1ltiple stakehol#ers an# e0,essi-e b1t in,o(plete infor(ation in an atte(pt to shape so(e ,oherent Hthin&4 that (a/ be per,ei-e# as a strate&/ b/ (arkets, finan,ial instit1tions an# ,ons1(ers. %trate&/ as pra,ti,e is th1s ,on,erne# with the #etaile# aspe,ts of strate&izin&; how strate&ists think, talk, refle,t, a,t, intera,t, e(ote, e(bellish an# politi,ize, what tools an# te,hnolo&ies the/ 1se, an# the i(pli,ations of #ifferent for(s of strate&izin& for strate&/ as an or&anizational a,ti-it/.

S2,

-e%t "opic > Basics of Structure and Design


Daft et al (2010) Chapter

'inin&s, 2. (200 ) 5r&anisation. In :. Bestwoo# * %. Cle&& (e#s) )e ating *rganisation: Point%+ounterpoint in *rganisation Studies. Pp2I5-2!2. 50for#$ 2la,kwell

31nro, :. (200 ) Disor&anisation. In :. Bestwoo# * %. Cle&& (e#s) )e ating *rganisation: Point%+ounterpoint in *rganisation Studies. Pp2! -2EI. 50for#$ 2la,kwell

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