Organizing for theOrganizing for the FutureFuture
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 FrameworkStrategic Management Framework
Planning Information Business Control & Reward Process Process Process Process
Strategy PerformanceStructure Processes
Culture
• Benchmarking
• Activity-Based Costing
• Balanced Scorecard
• Processes
• Activities
• New Organization Forms
• Technology
• Globalization
The ValueThe Value--Adding Corporation: Matching Structure with StrategyAdding Corporation: Matching Structure with Strategy
Holding companyAcquisitionUnrelated diversification
DivisionalInternalRelated diversification
FunctionalInternalSingle business
StructureGrowthStrategy
Division
Division/Company
Company
Bases
High
Medium
Low
Variable
Industry
Company
Company
Compensatio n
DivisionObjectiveUnrelated
CompanySubjective/Objective
Related
CompanySubjectiveSingle
CareerMeasuresStrategy
FinancialInvestmentUnrelated
StrategicProfitRelated
OperationalCostSingle
Type of ControlControl DataStrategy
Small
Large
Small
Staff
Holding company
Divisional
Functional
Structure
ServiceLowUnrelated
Policy/ReviewModerateRelated
PolicyHighSingle
Staff RoleCentralizationStrategy
Policies Contrasted for Two Diversified ModelsPolicies Contrasted for Two Diversified 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:New Forms of Corporate Organization:Corporate Strategy and OrganizationCorporate Strategy and 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 FrontEmerging Front--End/BackEnd/Back--End Model:End Model:IBMIBM’’s Fronts Front--Back StructureBack Structure
Human Resources
Financial Services
Process Industries
Legal AffairsCFO
CEO
Personal Computers
Client/Server Computing
- R&D
- Manufacturing
- Product marketing
- R&D
- Manufacturing
- Product marketing
- Sales
- Service
- Application software
- Customer
- Sales
- Service
- Application software
education
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
IBMIBM’’ss CustomerCustomer--Product StructureProduct Structure
Client/Server Computing Financial Services
R&D MarketingManufacturing
R&D MarketingManufacturing
R&D MarketingManufacturing
Sales Service
Sales Service
Sales Service
Storage Products
RetailingPersonal Computers
Consumer Goods
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
GEGE’’s SBU Structures SBU Structure
R&D MarketingManufacturing Sales Service
Jet Engines
Major Appliances
R&D MarketingManufacturing Sales Service
Medical Electronics
R&D MarketingManufacturing Sales Service
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Mirror Image Structure:Mirror Image Structure: Hybrid Functional/GeographicalHybrid Functional/GeographicalStructure withStructure with Functional Integrators and TeamsFunctional Integrators and Teams
General Manager
- Purchasing
- Operations
- Marketing
- Human Resources
- Finance
-
- Purchasing
- Operations
- Marketing
- Human Resources
- Finance
-
Human Resources Operations MarketingFinance
Central region
Southern regionNorthern region
Purchasing
-
- Purchasing
- Operations
- Marketing
- Human Resources
- Finance
-
Functional cross-geographical
teams
Mirror Image Structure:Mirror Image Structure: Hybrid Structure Plus with Product TeamsHybrid Structure Plus with Product Teams
Human Resources Operations MarketingFinance
General Manager
- Purchasing
- Operations
- Marketing
- Human Resources
- Finance
-
- Purchasing
- Operations
- Marketing
- Human Resources
- Finance
-
- Purchasing
- Operations
- Marketing
- Human Resources
- Finance
-
Central region
Southern regionNorthern regionPurchasing
New product teams
R&D
Hybrid Structure for Financial ServicesHybrid Structure for Financial Services
Human Resources
Regional Team
Field Units: Sales & Marketing
Corporate Development
Finance
General Manager
Mutual Funds
- Underwriting
- Claims
- Investments
- Information technology
- Product marketing
- Money markets
- Stocks
- Bonds
- Information technology
- Product marketing
- Insurance
- Mutual funds
- Certificates
- Joint ventures
- Financial consultation
- Direct marketing
- 401K plans
- Segment
Insurance Certificates
-
-
-
- Information technology
- Product marketing marketing
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
FrontFront--Back Linkage: Regional TeamsBack Linkage: Regional Teams
Human Resources
Field Units: Sales & Marketing
Corporate DevelopmentFinance
General Manager
Mutual Funds
-
-
- Product marketing
-
-
- Product marketing
- Manager
-
-
- Financial consultants
Insurance Certificates
-
-
- Product marketing
Segment marketing
- Midwest
- Northeast
- South
- West
- Canada
Customer Database
Product Database
Regional Teams
Marketing Council
- Midwest
- Northeast
- South
- West
- Canada
- Midwest
- Northeast
- South
- West
- Canada
- Midwest
- Northeast
- South
- West
- Canada
- Midwest
- Northeast
- South
- West
- Canada
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
FrontFront--End StructureEnd Structure
Paper Group
-
- Soap
- Food
- Toiletries
- Paper
Finance
Regional Team
Soup Group
Customer Team
Toiletries Group
Operations Marketing Distribution SalesMarketing OperationsI.T.
-
-
-
- Group Sales
-
-
-
- Group Sales
-
- Soap
- Food
- Toiletries
- Paper
-
- Soap
- Food
- Toiletries
- Paper
-
- Soap
- Food
- Toiletries
- Paper
-
- Soap
- Food
- Toiletries
- Paper
-
- Group Sales
-
- Soap
- Food
- Toiletries
- Paper
-
- Soap
- Food
- Toiletries
- Paper
-Boys -Safeway -Vons
-
- Soap
- Food
- Toiletries
- Paper
Sales
Front End
Staff
CEO
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Levels of International DevelopmentLevels of International 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 geographicaldivision
III Moderate Implementer Multidimensional network
IV High Leader Transnational organization
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
The Matrix Structure ofThe Matrix Structure of AseaAsea BrownBrown BoveriBoveri
CEO
Business Segment
Region
Country
Country Business
Business Area
Source: Mohrman, et al. Tomorrow’s Organization. Jossey-Bass, 1998.
Distribution of Power Between AxesDistribution of Power Between Axes
Business
Country
1 32 5 4 3 2 14
Amou
nt o
f Pow
er
Country Matrix Business Structure Structure 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.
CoordinationCoordination among the Power Between Axesamong the Power Between AxesHewlett Packard
Nestlé ABB
Business
Country
1 32 5 4 3 2 14
Amou
nt o
f Pow
er
Country Structure
Matrix Structure
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.
•• MultiMulti--cultural employees (cultural barriers, different cultural employees (cultural barriers, different work practices and legal environments, varying work practices and legal environments, varying degrees of skill levels)degrees of skill levels)
•• Broad spectrum of competitive environments Broad spectrum of competitive environments (number and type of competitors, different levels of (number and type of competitors, different levels of protectionism and regulatory environment)protectionism and regulatory environment)
•• Varying efficiency of manufacturing assetsVarying efficiency of manufacturing assets
•• VaryingVarying degree of infrastructure quality degree of infrastructure quality (communications and transportation)(communications and transportation)
•• Communications challenges (time zones, holidays, Communications challenges (time zones, holidays, language barriers)language barriers)
The Realities of a Truly Global CorporationThe Realities of a Truly Global Corporation
The Realities of a Truly Global Corporation (contThe Realities of a Truly Global Corporation (cont’’d.)d.)
YETYET
•• To become aTo become a ““world class corporationworld class corporation”” the entirethe entire corporation has to be oriented towards one highcorporation has to be oriented towards one high standard of world class performance. Make allstandard of world class performance. Make all employees feel that they are part of aemployees feel that they are part of a globalglobalorganization striving for world class status, andorganization striving for world class status, and feelfeel locallocal at the same time in the execution of theirat the same time in the execution of their programs.programs.
Being able to thrive in an environment which is:Being able to thrive in an environment which is:
•• globalglobal andand locallocal
•• complexcomplex andand simplesimple
•• bigbig andand smallsmall
•• centralizedcentralized andand decentralizeddecentralized
•• changingchanging andand stablestable
ABBABB’’s s ParadoxesParadoxes
The Renewal ProcessThe Renewal Process
Managing the tensionManaging the tensionbetween shortbetween short--termterm performance and longperformance and long--termtermambitionambition Creating and maintainingCreating and maintaining
organizational trustorganizational trust
RENEWAL PROCESS
Shaping and embeddingShaping and embedding corporate purposecorporate purpose
Managing operationalManaging operational interdependencies andinterdependencies and personal networkspersonal networks Linking skills, knowledgeLinking skills, knowledge
and resourcesand resources
ENTREPRENEUR
INTEGRATION PROCESS
Developing and nurturingDeveloping and nurturingorganizational valuesorganizational values
Creating and pursuingCreating and pursuingopportunitiesopportunities
Reviewing developinReviewing developing andg and supporting initiativessupporting initiatives
IAL PROCESS
Establishing strategicEstablishing strategicmission and performancemission and performance standardsstandards
TopFront-line Middle Management Management Management
Top Related