Organizing for the Future
Future
Arnoldo C. Hax
Galbraith. Designing Organizations. Jossey-Bass, 1995.
Galbraith, and Lawler III, et al. Organizing for the Future: The New Logic for Managing Complex Organizations, Jossey-Bass, 1993.
Mohrman, et al. Tomorrow’s Organizations. Jossey-Bass, 1998.
Strategic Management Framework
Framework
Planning
Process
Information
Process
Business
Process
Control & Reward
Process
Strategy
Structure
Processes
Performance
• Technology
• New Organization
Forms
• Processes
• Benchmarking
• Activities
• Activity-Based Costing
• Globalization
• Balanced Scorecard
Culture
The Value-Adding Corporation: Matching Structure with Strategy
Strategy
Strategy
Growth
Structure
Single business
Internal
Functional
Related diversification
Internal
Divisional
Unrelated diversification
Acquisition
Holding company
Strategy
Structure
Centralization
Staff
Staff Role
Single
Functional
High
Small
Policy
Related
Divisional
Moderate
Large
Policy/Review
Unrelated
Holding company
Low
Small
Service
Strategy
Control Data
Type of Control
Single
Cost
Operational
Related
Profit
Strategic
Unrelated
Investment
Financial
Strategy
Variable
Bases
Measures
Career
Single
Compensatio
n
Company
Low
Company
Subjective
Company
Related
Company
Medium
Division/
Company
Subjective/
Objective
Company
Unrelated
Industry
High
Division
Objective
Division
Policies Contrasted for Two Diversified Models
Models
Strategy
Related
Unrelated
Structure
Divisional
Holding company
Centralization
Moderate
Low
Staff
Large
Small
Staff Role
Policy/Review
Service
Control
Profit center
Investment center
Control type
Strategic/Financial
Financial
Compensation
Company
Industry
Percentage variable
10-30%
50% or more
Measures
Subjective/Objective
Objective
Careers
Company
Division
New Forms of Corporate Organization:
Organization:
Corporate Strategy and Organization
Organization
Strategy
Single
Dual
Related
Mixed
Unrelated
Unrelated
Organizatio
n
Functional
Front/Back
Divisional
Cluster
Holding
LBO
Diversity
Low
High
Very high
Value-Added
High
_________________________
___________________________________________
Low
Emerging Front-End/Back-End Model:
Model:
IBM’s Front-Back Structure
Structure
CEO
Human
Resources
Client/Server
Computing
CFO
Personal
Computers
Financial
Services
Legal Affairs
Process
Industries
- R&D
- R&D
- Sales
- Sales
- Manufacturing
- Manufacturing
- Service
- Service
- Product
marketing
- Product
marketing
- Application
software
- Application
software
- Customer
education
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
IBM’s Customer-Product Structure
Structure
Client/Server Computing
R&D
Manufacturing
Marketing
Financial Services
Sales
Personal Computers
R&D
Manufacturing
Marketing
Manufacturing
Retailing
Sales
Service
Consumer Goods
Storage Products
R&D
Service
Marketing
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Sales
Service
GE’s SBU Structure
Structure
Jet Engines
R&D
Manufacturing
Marketing
Sales
Service
Marketing
Sales
Service
Sales
Service
Major Appliances
R&D
Manufacturing
Medical Electronics
R&D
Manufacturing
Marketing
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Mirror Image Structure: Hybrid Functional/Geographical
Functional/Geographical
Structure with Functional Integrators and Teams
Teams
General
Manager
Human Resources
Purchasing
Finance
Operations
Marketing
Northern
region
Central
region
Southern region
-
Functional
cross-geographical
teams
- Purchasing
- Purchasing
- Purchasing
- Operations
- Operations
- Operations
- Marketing
- Marketing
- Marketing
- Human Resources
- Human Resources
- Human Resources
- Finance
- Finance
- Finance
-
-
-
Mirror Image Structure: Hybrid Structure Plus with Product Teams
Teams
General
Manager
Human Resources
Finance
R&D
Operations
Marketing
New
product
teams
Northern
region
Central
region
- Purchasing
- Purchasing
- Purchasing
- Operations
- Operations
- Operations
- Marketing
- Marketing
- Marketing
- Human
Resources
- Human
Resources
- Human
Resources
- Finance
- Finance
- Finance
-
-
-
Purchasing
Southern region
Hybrid Structure for Financial Services
Services
General
Manager
Human
Resources
Finance
Insurance
Corporate
Development
Mutual Funds
Field Units: Sales &
Marketing
Certificates
Regional Team
- Underwriting
- Claims
- Money markets
- Stocks
-
- Joint ventures
-
- Insurance
- Financial
consultation
- Direct marketing
- Investments
- Bonds
-
- Mutual funds
- Information
technology
- Information
technology
- Information
technology
- Certificates
- Product marketing
- Product marketing
- Product marketing
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
- 401K plans
- Segment
marketing
Front-Back Linkage: Regional Teams
Teams
General
Manager
Human
Resources
Finance
Insurance
Marketing
Council
Regional
Teams
Corporate
Development
Field Units: Sales &
Marketing
Certificates
Mutual Funds
-
-
-
-
-
-
-
-
- Product
marketing
- Product
marketing
- Product
marketing
- Midwest
- Midwest
- Midwest
- Midwest
- Midwest
- Northeast
- Northeast
- Northeast
- Northeast
- Northeast
- South
- South
- South
- South
- South
- West
- West
- West
- West
- West
- Canada
- Canada
- Canada
- Canada
- Canada
Product
Database
Customer
Database
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
- Manager
Segment
marketing
- Financial
consultants
Front-End Structure
Structure
CEO
Staff
Front End
Paper
Group
Toiletries
Group
Soup
Group
Customer
Team
Regional
Team
Finance
Marketing
Sales
Operations
Marketing
Distribution
Sales
I.T.
Operations
-Boys
-Safeway
-Vons
-
-
-
-
-
-
-
-
-
-
-
-
-
- Group Sales - Soap
- Soap
- Soap
- Soap
- Soap
- Soap
- Soap
- Soap
-
- Food
- Food
- Food
- Food
- Food
- Food
- Food
- Food
- Group Sales
- Toiletries
- Toiletries
- Toiletries
- Toiletries
- Toiletries
- Toiletries
- Toiletries
- Toiletries
- Paper
- Paper
- Paper
- Paper
- Paper
- Paper
- Paper
- Paper
- Group Sales
-
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Levels of International Development
Development
Level
Proportion of Assets
& Employees Outside
of the Home Country
Role of the
Subsidiary
Type of International
Organization
I
Zero
None
National company
II
Low
Startup
International geographical
division
III
Moderate
Implementer
Multidimensional network
IV
High
Leader
Transnational organization
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
The Matrix Structure of Asea Brown Boveri
Boveri
CEO
Business
Segment
Region
Business
Area
Country
Country
Business
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Distribution of Power Between Axes
Axes
Amount of Power
Business
Country
1
2
3
4
5
4
3
Matrix
Structure
Country
Structure
1. Voluntary organization (self-organizing network)
2. Virtual teams
3. Formal teams
4. Business or country manager as full-time team leader
5. Matrix organization
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
2
1
Business
Structure
Coordination among the Power Between Axes
Nestlé
Hewlett Packard
ABB
Amount of Power
Business
Country
1
2
3
Country
Structure
4
5
4
3
2
Matrix
Structure
1
Business
Structure
Cross-border coordination
Economic activity of host governments
Diversity of firm’s business portfolio
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
The Realities of a Truly Global Corporation
• Multi-cultural employees (cultural barriers, different
work practices and legal environments, varying
degrees of skill levels)
• Broad spectrum of competitive environments
(number and type of competitors, different levels of
protectionism and regulatory environment)
• Varying efficiency of manufacturing assets
• Varying degree of infrastructure quality
(communications and transportation)
• Communications challenges (time zones, holidays,
language barriers)
The Realities of a Truly Global Corporation (cont’d.)
d.)
YET
YET
•• To become a “world class corporation” the entire
corporation has to be oriented towards one high
standard of world class performance. Make all
employees feel that they are part of a global
organization striving for world class status, and
feel local at the same time in the execution of their
programs.
ABB’s Paradoxes
Being able to thrive in an environment which is:
• global
and
local
• complex
and
simple
• big
and
small
• centralized
and
decentralized
• changing
and
stable
The Renewal Process
Process
Managing the tension
between shortshort-term
performance and longlong-term
ambition
Managing operational
interdependencies and
personal networks
Creating and pursuing
opportunities
RENEWAL PROCESS
Creating and maintaining
organizational trust
INTEGRA
TION PR
OCESS
Linking skills, knowledge
and resources
ENTREPR
ENEURIA
L PROCE
SS
Reviewing developing
developing and
supporting initiatives
Front-line
Management
Shaping and embedding
corporate purpose
Middle
Management
Developing and nurturing
organizational values
Establishing strategic
mission and performance
standards
Top
Management