Manual New Directions in Corporate Strategy

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In Chapter 6, we noted that organizational design has been dominated by the re- quirements of cooperation rather than coordination. As a result, hierarchical struc- tures have emphasized control and the need for unitary lines of command. Once we acknowledge that building outstanding capabilities is the primary goal of organiza- tional design, then the emphasis shifts to the need to achieve effective coordination. If we accept that most enterprises need to deploy multiple capabilities and the coor- dination needs of different capabilities vary, it follows that our organizational structure.

Hence, most business enterprises. Beyond Unitary Structures The principles of knowledge management offer one approach to understanding how different capabilities require different types of struc- ture. James March refers to the former as exploration and the latter as exploitation. The solution is the simultaneous deployment of different structures for different tasks.

However, ex- ploratory activities, such as new product development, typically require interacting with different people within a different type of collaborative relationship. Here, a multifunctional product development team is more conducive to developing and applying product development capability. Similarly, for identifying and transferring manufacturing best practices, an informal cooperative group comprising different plant managers is likely to be most effective. Separate structures for pursuing the exploratory activities required for developing and adapting the organization have been described as parallel learning structures.

Promising new products that emerge from the informal structure are taken within the formal structure. The outcome was a powerful device for initiating change within the formal structure. Where the purpose of the new structures is to develop capabilities, they may be almost entirely informal.

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The appendix to Chapter 5, discussed informal knowledge- sharing networks called communities of practice. These have been merged into about 20 Global Networks that are focused around areas of tech- nology such as the Wells Global Network and the Subsurface Knowledge Sharing Network, and around commercial activities such as Competitor Intelligence and Procurement.

Communities of practice have emerged as important vehicles for. Team-based, Project-based, and Process-based Structures Creating struc-. Flexible, team-based structures can achieve the kinds of adaptable integration that are the basis of dynamic capabilities, yet, beyond some very basic requirements of team structure, we know little about the dynamics of team interaction. The desire to improve coordination across multiple, linked capabilities has encouraged companies to align their structures more closely with their internal processes.

In many cases, these macro processes extend beyond the company. Organizing for Adaptability. One of the implications we drew from our brief review of complexity theory was the idea that, in order to cope with a complex environment, an enterprise might have to resort to simple rules. A similar implication may be drawn in relation to internal organization.

Foundations of a forward-looking board

To the extent that organizations are required to perform tasks whose complexity and variety require structures and systems that we cannot design for the. Loosening the structure may be a critical step toward building the ambidextrous organization — one that can combine multiple capabilities and accom- modate both gradual change, evolutionary change, and occasional revolutionary leaps.

Yet, paradoxically, this paring down of formal systems permitted more complex patterns of coordination and collaboration within GE. Thus, most companies have given more attention to organizational culture, values and modes of behavior, while relying more upon coordination occurring voluntarily and spontaneously. Three concepts have proven practically useful in this: identity , modularity , and networks.

These ideas are components of what has been termed organizational identity — a. To this extent companies may need to manage their external image in order to achieve a change in identity. Changing its identity required consid- erable investment in projecting images that allowed the reorientation of its identity. In Chapter 6, we examined the argument that hierarchical structures based on loosely coupled, semi-autonomous modules possessed considerable adaptation advantages over more tightly integrated structures.

Organization theory emphasizes the distinction between the organization and its environment, while economics distinguishes between markets and hierarchies as alternate organizational mechanisms. If cooperation across individuals and small enterprises can achieve the close coordination conventionally associated with corporations, the large, integrated company may disappear as the dominant organizational form in many industries.

Intranets that link together internal units of the enterprise with outside suppliers, customers, and partners have had a.


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At Cisco Systems, internet systems not only link customers and suppliers for the purposes of ordering and invoicing, but also provide common systems for managing technology and joint product develop- ment and extend budgeting and strategic planning systems to its partners. Some of the most remarkable and successful network forms are the open-source software communities that have created highly successful computer software such as Linux and Apache.

New Modes of Leadership. New organizational structures and strategic priorities point to new models of leader- ship. The guidelines for strategy and organization design that we have discussed so far point to management leadership as directed more toward the creation and maintenance of the organiza- tional environment rather than decision making per se. If the foundation of strategy is a sense of organizational identity, then a key role of top management is to clarify and communicate that identity.

To this end, the purpose and values of the enterprise must be consistent with those of its employees. To the extent that our lives are a search for meaning, the satisfaction that our work offers will depend critically on the congruence between organizational purpose and our own aspirations. Ultimately, creating a common identity between the organization and those who work within it may require the organization to recognize the existence of human emotion and,.

The balance has clearly shifted from attributes traditionally thought of as masculine strong decision-making, leading the troops, driving strategy, waging competitive battle to more feminine qualities listening, relationship-building, and nurturing. However, a recent stream of research has pointed to the role of a set of personality attributes that have been referred to as emotional intelligence. These comprise:.

Daniel Goleman argues that these attributes are positively associated with superior performance across all leadership styles and over a wide range of management situations. While the future remains unknowable, its roots are in the present and the past. From what we observe today, we can identify many of the key developments of the next few years. The trends that we discern in science and technology, eco- nomic development, government policies, social structure, demographics, and lifestyles will shape the business environment for the remainder of the decade.

We have reviewed some of the sources of competitive advantage in the emerging business environment and the capabilities that companies will need to develop and deploy. Emerging theories of complexity, self-organiza- tion, knowledge management, and leadership can augment our existing standard tools of strategic management. Even more encouraging is the fact that experimentation and innovation at the. Strategic management remains highly depend- ent on concepts and theories drawn from the basic disciplines of economics, sociology, psycho- logy, biology, and systems theory.

However, the encouraging feature of the past few years has been greater synthesis across these disciplines and between theory and practice. In areas such as the analysis of competition, determinants of. Formidable challenges lie ahead. As the opportunities for creating value from downsizing, refocusing, restructuring, and reengineering have become mined out, so managers have been forced to explore new territory seeking new sources of competitive advantage.

While our basic tools of strategy analysis — industry analysis and the analysis of resources and capabilities — remain valid and robust, it is clear that we shall need to continually develop our concepts and frameworks to meet the circumstances of tomor- row. McKinsey Quarterly , no. Times May 27, Laursen and N. Whittington, A. Pettigrew, S. Peck, E. Fenton, and. Arthur op. October 14, Zollo and S. Faulkner and A. Campbell, Oxford Handbook of Strategy , vol. Oxford: Oxford University Press, : 90—1. Ghoshal, C. Bartlett, and P. Business School Press, Spring : 9— Criticality New York: Copernicus, Wheatley and M.

Kellner Rogers, A Simpler Way. Berrett-Koehler, Shani, Parallel Learning Structures. Reading, MA: Addison-Wesley, Brown and P. Organization Science 10 : — Wenger and W. University Press, Brown and K. Eisenhardt, Competing on the. Review January—February Katzenbach and D. Business School Press, ; W. Order-creating Networks of Distributed Intelligence:. Company April : 77—83; and N. Management Science 43 : — Disaggregation in Oticon: An Organizational Economics.

Interpretation of the Rise and Decline of the Spaghetti. Eisenhardt and D. Johansson, and F. Journal of Supply Chain Management 6, no. Tushman and C. Eisenhardt and S. Ambidextrous Organization: Managing Evolutionary. Harvard Business Review May—June : 72— Review 38, no.

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Grant, Cases in. Contemporary Strategy Analysis , 6th edn Oxford:. Review January—February : 91— Blackwell, Gioia, M. Schultz, and K. New York: Free Press, ; H. Ahlstrand, and J. Lampel, Strategy Safari: A Guided. Tour through the Wilds of Strategic Management New. Knowledge Management in Product and Organization.

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Building a forward-looking board | McKinsey

York: Free Press, Special Issue : 63—76; M. General Modular Systems Theory and its Application to. Management Journal 24 : — Management Review 25 : — Management Review 22 : — Fall : 9— Journal of Applied Corporate Finance : 79— Leiblein and D.


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  7. Cool, J. Henderson, and. Examination of the Effect of Uncertainty and Firm. Abate eds Restructuring Strategy Oxford: Blackwell. Publishing, Strategic Management Journal 24 : — Eisenhardt and J. Capabilities: What are They? November 27, : 4—7. See also D. Journal 21 : — Ticoll, and A. Lowry, Digital Capital: Harnessing the.


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