ORGANIZATION DESIGNING AND LEADERSHIP FOR STRATEGY AND

SUCCESS

ORGANIZATION DESIGN, LEADERSHIP AND STRATEGY

Organization Culture

• Shared Norms and Values

• Rituals and Conventions

• Shared views about nature of business

Organization Structure

• Formal System of task and authority relationship

• Mechanism for control and • Coordination

• Response mechanism to • environment

Organization Design

Leadership

Strategy: The Pathway to Achieve Business Objectives

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

ORGANIZATION DESIGNEra 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)

7

Generic Strategies

Differentiation

Low-cost leadership

Focus

LEADERSHIP

Force = Mass * Acceleration

9

Design Challenge

Design Challenge (cont.)

Design Challenge (cont.)

Design Challenge (cont.)

ENTREPRENEURSHIP IS A BALANCING GAME

Profit

Growth

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

Size

Age of the Organization

Creativity

Direction

Delegation

Coordination Collaboration

leadership

autonomy

control

red tape

“ ? “

Young Mature

Small

Large

How Organizations Grow

Evolution RevolutionSteady or prolonged growth and Stability

Substantial organizational change

Quiet periods Turbulent Times

No major economic setback or internal disruption

Serious upheaval of management practices

Modest adjustments to maintain growthEg: Centralized 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 ventureFrequent and informal communicationLong hour of workControl 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 motivationPeriodic reporting becomes major control toolEfforts in new acquisitionsInfrequent 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 unitsFormal planning and intensive reviewsHiring at headquarters to initiate companywide

programsFormation of SBUs

& the red tape crisis

CONT….

Phase 5: Collaboration Emphasis on greater spontaneity in management

action through teamsSocial control and self discipline take over from formal

controlQuick problem solving through teamsHeadquarter staff experts are reduced in numberMatrix-type structure is used frequentlyUse 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

Size

Age of the Organization

Creativity

Direction

Delegation

Coordination Collaboration

leadership

autonomy

control

red tape

“ ? “

Young Mature

Small

Large

Organizational Practices and Phases of GrowthCategory Phase I Phase II Phase III Phase IV Phase V

Management Focus Make and SellEfficiency of operations

Expansion of market

Consolidation of Organisations

Problem Solving and Innovation

Organisation Structure Informal

Centralized and Functional

Decentralized and Geographical

Line Staff and Product Groups

Matrix of Teams

Top Management Style

Individualistic and Entrepreneurial Directive Delegative Watch Dog Participative

Control system Market Results

Standards and Cost Centers

Reports and Profit Centers

Plans and Investment Centers

Mutual Goal Setting

Management Reward Emphasis Ownership

Salary and Merit Increases

Individual Bonus

Profit Sharing and Stock Options Team Bonus