ORGANIZATION DESIGNING AND
LEADERSHIP FOR STRATEGY AND
SUCCESS

ORGANIZATION DESIGN, LEADERSHIP AND
STRATEGY
Organization Design
Organization Structure
•Formal System of task and authority relationship
•Mechanism for control and
•Coordination
•Response mechanism to
•environment
Leadership
Organization Culture
•Shared Norms and Values
•Rituals and Conventions
•Shared views about nature of business
Strategy: The Pathway to Achieve Business Objectives

HOW IT IS USEFUL FOR AN
ENTREPRENEUR TO KNOW ALL THIS?

ORGANIZATION DESIGN
Era 1: Self Contained Organization Design
(Functional, Divisional and Matrix)
Era 2: Horizontal Organization Design with Team – and Process Based Emphasis
(Ex. Engineering and design connection, Handling entire claim, )
• Organize around complete workflow processes
• Flatten hierarchy and use of teams
• Appoint process team leaders
• Provide expertise from outside the team
• Enhances interaction with customers and suppliers
• Works best when internal coordination, flexibility and responsiveness can greatly enhance customer value

ERA 3: ORGANIZATIONAL
BOUNDARIES OPEN UP
• Hollow: Outsourcing the processes (PMC, Citec,
MphasiS, BenQ)
• Modular: Outsourcing the product parts (Bombardier,
DaimlerChrysler Smart Car)
• Virtual: Showing if there is more than actually present (M&S and PerUna, Symbian Ltd., Reflect.com)

NEW DEMAND ON ENTREPRENEURS
AND VENTURES
• Get the Right Partner on the Bus (Collaborative role,
Partnership)
• Select People With Lateral Organizing Skills (more of soft skills, appreciation for multidisciplinary approach)
• Seek Clarity, Not Control (Co creation, Good contract)
• Design Coordination Mechanism (Governance boards,
Clear matrices, Periodic reviews)

Generic Strategies
Low-cost leadership
Differentiation Focus
7

LEADERSHIP
Force
=
Mass * Acceleration

Design Challenge
9

Design Challenge (cont.)

Design Challenge (cont.)

Design Challenge (cont.)

ENTREPRENEURSHIP IS A BALANCING
GAME
Growth
Profit Control

Organization Design, Growth and
Leadership
• Applying frameworks to understand different organization design and practices for both large and small businesses along the venture life cycle
• Greiner’s Evolution and Revolution as
Organizations grow, HBR , 1998

Key Dimensions of Organization
Development
• Age of the organization
• Size of the organization
• Stages of the evolution
• Stages of revolution
• Growth rate of the industry

ORGANIZATIONS FOLLOW AN
EVOLUTIONARY TRAJECTORY
• Future of an organization may be less determined by outside forces than it is by the organization’s history.
• It is similar to the tenet of psychologist that individual behavior is determined primarily by previous events and experiences, not by what lies ahead.

Greiner’s Five Phases of Growth
Large z e i
S
Creativity
Direction
Delegation
Coordination
“ ? “
Collaboration red tape control autonomy
Small leadership
Young Age of the Organization Mature

How Organizations Grow
Evolution
Steady or prolonged growth and
Stability
Quiet periods
No major economic setback or internal disruption
Modest adjustments to maintain growth
Eg: Centralized Practices
Revolution
Substantial organizational change
Turbulent Times
Serious upheaval of management practices
New sets practices for evolutionary stage
Eg : Demands for Decentralization
Source: Greiner’s Evolution and Revolution as
Organizations grow, HBR , 1998

PHASES OF GROWTH
Phase 1: Creativity
Initiating the entrepreneurial venture
Frequent and informal communication
Long hour of work
Control through immediate marketplace feedback
& the leadership crisis

CONT…
Phase 2: Direction
• Functional organization structure is introduced
• Accounting system for inventory and purchasing
• More formal communication
• The new manager and key supervisor take most responsibility, Lower level employees feel restricted
• & the autonomy crisis (combined with concern on decision making ability)

CONT….
Phase 3: Delegation
Greater responsibility to managers
Profit centers and bonuses used for motivation
Periodic reporting becomes major control tool
Efforts in new acquisitions
Infrequent communication from the top, brief visits
& the control crisis

CONT….
Phase 4: Coordination
Rise of formal system to achieve greater coordination
Product groups are formed from decentralized units
Formal planning and intensive reviews
Hiring at headquarters to initiate companywide programs
Formation of SBUs
& the red tape crisis

CONT….
Phase 5: Collaboration
Emphasis on greater spontaneity in management action through teams
Social control and self discipline take over from formal control
Quick problem solving through teams
Headquarter staff experts are reduced in number
Matrix-type structure is used frequently
Use of conferences, educational programs etc.
& Psychological Saturation

Organizational Design Challenges

HOW GREINER’S MODEL IS USEFUL
FOR BUSINESS LEADERS
• Knowing where the firm is in the developmental sequence
• Recognize the range of solutions
• Realize that solutions breed new problems

Factors for Survival and Growth
(Company)
• Financial resources
• Personnel resources
• Systems resources
• Business resources

Factors for Survival and Growth
(Entrepreneur)
• Goals
• Operational abilities
• Managerial ability
• Strategic abilities

Organization Design, Growth and
Leadership
• Applying frameworks to understand different organization design and practices for both large and small businesses along the venture life cycle
• Greiner’s Evolution and Revolution as
Organizations grow, HBR , 1998

Greiner’s Five Phases of Growth
Large z e i
S
Creativity
Direction
Delegation
Coordination
“ ? “
Collaboration red tape control autonomy
Small leadership
Young Age of the Organization Mature

Organizational Practices and Phases of Growth
Category
Management Focus
Organisation
Structure
Phase I
Make and Sell
Informal
Phase II
Efficiency of operations
Centralized and
Functional
Top Management
Style
Control system
Management
Reward Emphasis
Individualistic and
Entrepreneurial Directive
Standards
Market Results
Ownership and Cost
Centers
Salary and
Merit
Increases
Phase III
Expansion of market
Decentraliz ed and
Geographic al
Phase IV
Consolidation of
Organisations
Line Staff and
Product Groups
Delegative Watch Dog
Reports and Profit
Centers
Individual
Bonus
Plans and
Investment
Centers
Profit Sharing and Stock
Options
Phase V
Problem
Solving and
Innovation
Matrix of
Teams
Participative
Mutual Goal
Setting
Team Bonus