Organizational Design

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Organizational Design Processes

• Session 6
• MBA Course 51-454-02Fall 2006

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What was it all about?

• Get organized make it work
• To get the job done!

STRUCTURE
PROCESSES
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What was it all about?

• Configuring
• Structure
• Processes
• Reward systems
• People practices policies

TO SUPPORT THE STRATEGY
Source Galbraith, J al Designing Dynamic
Organization Chapter 1 Getting started
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STRATEGY Vision Mission Direction Competitive
advantage
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Organization design star model
STRATEGY Vision Mission Direction Competitive
advantage
PEOPLES PRACTICES Staffing and Selection Performan
ce feedback Learning and Development
STRUCTURE Power Authority Reporting
Relationship Oganizational roles
PROCESSES AND LATERAL CAPABILITY Networks,
Processes Teams, Integrative Roles Matrix
structure
REWARD SYSTEM Goals, Scorecards Values and
Behaviors CompensationReward
Source Galbraith, J al Designing Dynamic
Organization Chapter 1 Getting started
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What was it all about?

• Get organized make it work
• To get the job done!

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Learning fromThe Powerful Office
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PAWLING PORCELAIN MANUFACTURING
President CEO
Vice-President Marketing
Vice-President GM OP
Vice-President Fin. Control
Personnel Director
CLIFFORD Management Services Off.
R D
Production
Marketing
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PAWLING PORCELAIN MANUFACTURING
JACK President CEO
JOHN Vice-President Marketing
MIKE Vice-President GM OP
PAUL Vice-President Fin. Control
MARY Personnel Director
CLIFFORD Management Services Off.
SHEILA R D
BOB Production
PETER Marketing
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PAWLING PORCELAIN MANUFACTURING
JACK CEO
JOHN Marketing
MIKE GM OP
PAUL Fin. Control
MARY Director
CLIFFORD Management Services Off.
SHEILA R D
BOB Production
PETER Marketing
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PAWLING PORCELAIN MANUFACTURING
JACK CEO
JOHN Marketing
MIKE GM OP
PAUL Fin. Control
MARY Director
CLIFFORD Management Services Off.
SHEILA R D
BOB Production
PETER Marketing
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PAWLING PORCELAIN MANUFACTURING
JACK CEO
JOHN Marketing
MIKE GM OP
PAUL Fin. Control
MARY Director
CLIFFORD Management Services Off.
SHEILA R D
BOB Production
PETER Marketing
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Learning fromThe Powerful Office

• An Organization
• A SOCIAL Institution
• Made of PEOPLE
• Playing a ROLE
• And INTERACTING between each other.

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Learning fromThe Powerful Office

• Things evolve New people comes in and both can
  have some impact
• Beyond the formal line of authorities there are
  relationships, formal and informal, between
  people

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Learning fromT.E.K.

• ACTIONS RELATED TO TEK / US
• Training 6 1
• Inf., consultation involvement 5 9
• Nature of the work 3 1
• Monetary 2 3
• Hiring a consultant 1 0
• HR policies and practices 0 3

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Learning fromT.E.K.

• Respecting the line of authorities
• You can change people through training
• Money does not fix everything

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Learning fromT.E.K.

• INNOVATION
• Operational innovation
• How the work is done.

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Learning fromT.E.K.

• T.E.K Key strategic actions
• Restructure work so that each employee performs
  all 25 operations involved on the assembly line.
  Change technology and organisation of work
  stations accordingly
• Revise salaries so that they are slightly higher
  than the industry average.
• Implement a company share purchase plan for
  employees using a wage deduction system.

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Learning fromT.E.K.

• Innovation can blossom almost anywhere in an
  organisation that is properly structure to
  encourage it.

Source The Economist The new organisation a
survey of the company
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Learning fromT.E.K.

• Toyota's success encourages every worker, no
  matter how far down the production line, to
  consider himself a knowledge worker and to think
  creatively about improving his particular corner
  of the organisation.

Source The Economist The new organisation a
survey of the company
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Learning fromMUCH / MRH

• Facing the growing complexity
• Matrix forms
• process organization

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Board
Administration
Therapeutic Services
Information Services
Diagnostic Services
Support Services
Admissions Billing, etc. Med. Records Computer
Info. Health Ed. Human Resour.
PT, OT Speech/Lang. Resp. Therapy Pharmacy
Nursing Dietary
Med. Lab Radiology Nuclear Med ER Cardiology
Neurology
Central Supply Biomedical Housekeeping
Maintenance Dietary Transportation
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Maisonneuve Rosemont Hospital
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Learning fromMUCH / MRH

• The growing complexity of health care and social
  problems.
• The aging of the population the chronicity.
• The nature of the problems
• forces to call upon
• various disciplines and various health care
  centres,
• leading to better integrated services.

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Learning fromMUCH / MRH

• The growing complexity
• the nature of the problems
• forces to call upon
• various disciplines
• leading to better integrated services.

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Learning fromMUCH / MRH

• To meet new challenges
• rethink our ways of delivering care and
  services to the population, with a view to
  situating the client at the centre of our
  concerns.
• André Ducharme, GM, MRH

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Learning fromMUCH / MRH

• To meet new challenges
• rethink the way of delivering products and
  services to the client

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Learning fromMUCH / MRH

• CHANGING THE CULTURE
• beyond the organizations structure
• cultivate a
• collective sense of responsabilitity
• among employees

Source Majchrzak, A. Wang, Q. Breaking the
Functional Mind-set in Process Organizations HBR
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Learning fromVERIFONE

• A distance-insensitive company held together by
  electronic glue.
• Spread all over the world The workplace is where
  the employee is.

A VIRTUAL CORPORATION
Source The VERIFONE (1997) case HBR
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Learning fromVERIFONE

• A virtual corporation
• is created by the extensive contracting out of
  activities IT allows independent firms to join
  together in networks, which then act as if they
  are single corporations.
• Also call the networked organization.

Source Galbraith, Jay R. Creating a virtual
corporation
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Learning fromVERIFONE

• A virtual team
• is a group of coworkers, geographically and/or
  organizationally dispersed, who is assembled
  using a combination of telecommunications and
  information technologies to accomplish an
  organizational task.

Souce Townsend A.M. al Virtual Teams
Technology and the workplace of the future
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Learning fromVERIFONE

• Todays information technology has a dramatic
  impact on the way organizations work
• IT enables work to be organized in many and in
  very different ways

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Learning fromIBM
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Learning fromIBM

• Either
• Splitting IBM businesses or
• Integrating into 1-activity
• How to explain the two logics?

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Learning fromIBM

• Splitting IBM businesses
• In reaction to the new environment new
  competitors providing narrow/horizontal slice of
  the total package
• Customers support
• To break up IBMs pricing umbrella (bundle
  prices)
• Interest in getting computing power to the
  individual employees
• To bring more competition into the marketplace
• A financially-market driven strategy IPO of many
  companies
• For many IBM executives, an organizational and
  cultural logic, where each entity already first
  perform in its own turf.

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Learning fromIBM

• Integrating into 1-activity
• A client-driven logic at the end of the day, the
  customer needs an integrator, to create value
• Problem solving
• Ability to apply complex technologies to solve
  business challenges
• integration
• In this new environment (with tens of thousands
  small companies) IBM s scale and broad-based
  business capabilities were its competitive
  advantage
• A new organizational and cultural logic
  performance is measured in terms of contribution
  to the whole

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Learning fromIBM

• A new conception of IBMs business model
• Based on two emerging forces
• Customers would increasingly value companies that
  could provide solutions that integrated
  technology from various suppliers and integrated
  technology into the processes of an enterprise.
• Networked model of computing would replace the
  PC-dominated world of 1994.

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Learning fromIBM

• A new conception of IBMs business model
• Creating a Global Enterprise
• Capitalizing on its ability to integrate all the
  parts for the customers.

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Learning fromIBM

• A new conception of IBMs business model
• A services-led model
• Designs, builds and delivers integrated
  technology solutions.
• Build the largest and the most influential
  services business in the IT industry.

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Learning fromIBM

• A new conception of IBMs business model
• Pulling together all of IBMs software assets
  under a single executive In a world of open
  standards focus on the middlewareworking
  cross platform
• Acquiring Lotus to complete the middleware
  portfolio and enter in the world of
  collaborative computing.
• Leaving application software and partnering
  with application software developers
• Enter the technology components marketplace.

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Learning fromIBM

• A new conception of IBMs business model
• Integrating IBM
• Organization / Brand Image / Compensation

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Learning fromIBM

• A new conception of IBMs business model
• Organization
• Breaking up the fiefdoms from geographical
  organization to a global, customer-oriented
  organization.
• Brand Image
• Global and unified brand
• Compensation
• Pay for performance stock-based compensation
  bonus link to overall IBMs performance

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Learning fromIBM

• Which activities should be kept, outsourced or
  abandoned.
• To protect and develop
• the integrator" role,
• to better-served the client
• stay on focus

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Learning fromIBM

• Which activities should be kept, outsourced or
  abandoned.
• Sell unproductive assets and not essential for
  the company, to raise cash (examples Expensive
  training centers, Fine-art collection, Federal
  Systems Company/national security and space
  programs)
• Leaving application software and partnering
  with application software developers (no longer
  competing against them)
• Selling the IBM network (5 billion) to ATT a
  part of the stack that was not strategically
  vital and avoid huge capital investment to
  maintain the network.
• Exit the DRAM business exit the hard-disk-drive
  business
• Selecting markets and competing on the basis
• of a distinctive, sustainable competency.

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Learning fromIBM

• IBM transformation of the management roles and
  organizational culture.
• A culture of collaboration
• Organizational structure and processes that
  favour the collaboration the expression of a new
  culture.
• Managing by principles
• Focus on the outside the client.

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Learning fromIBM

• IBM transformation of the management roles and
  organizational culture.
• For the Mature Business (H1)
• Operators deep functional expertise
• For the rapidly Growing Business (H2)
• Business Builders entrepreneurial
• For the Emerging Business (H3)
• Visionaries unconventional thinkers.

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Managing changes

• Culture isnt just one aspect of the game it
  is the game.

Source GERSTNER, L.V. Who Says Elephant Cant
dance? p.182
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The new IBMnew CEO Sam Palmisano

• We have to let go the old command-and-control
  structure if we were going to grow
• The business must adopt a culture of
  collaboration both within their four walls and
  outside
• Linda Sanford, Senior Vice-president, IBM Let
  Go to Grow

Source The Economist The new organisation a
survey of the company
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What is it all about?
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Organizational Design Processes

• An organizations structure is not an end in
  itself. But it sets the context for managerial
  action.
• Structure is just one tool that managers can
  employ to achieve the objectives that have been
  set.

Source Nohria, N. Note on Organization
Structure Harvard Business School
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From the classical forms

• The Functional Form
• Activities grouped by common function
  production, sales, finance, RD
• The Divisional Form
• Grouping diverse functions into divisions
  products, region, client-based
• The Matrix Form
• Divisional and functional structures are
  implemented employees report to both of them.

Source Nohria, N. Note on Organization
Structure Harvard Business School
53
to the process organization

• Moving away with the functional silos
• To create new organizational structures
  process-complete unit
• each able to perform all the cross-functional
  steps or tasks required to meet
• customers' needs.

Source Majchrzak, A. Wang, Q. Breaking the
Functional Mind-set in Process Organizations HBR
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to new forms of organization

• The disaggregated virtual networked
• Creating smaller sub-units with significant
  decisions rights
• Decreasing the layers of management and the
  extent of central staff
• Joint-venture and strategic-alliance and
  outsourcing the line of what is inside and what
  is outside has blurred.

Source The Economist The new organisation a
survey of the company
55
to new forms of organization

• The disaggregated virtual networked
• Linked closely where opportunities to create
  values and loosely where values lie in
  differentiation
• And where IT becomes an electronic glue
• Redrawing the boundaries

Source The Economist The new organisation a
survey of the company
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New Organization ModelNew Management Roles

• Building from small front-line operating units
• Cross-unit integrative process
• Commitment to empowerment

Source BARTLETT, C.A. GHOSHAL S. The Myth of
the Generic Manager
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New Organization ModelNew Management Roles

• in building and managing a company that
  stimulates people to take initiatives, to
  collaborate, to renew themselves and the
  organization

Source GOSHAL, S., BARTLETT, C.A. Building
Organizational Capabilities
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New Organization ModelNew Management Roles

• The Entrepreneurial Process
• Looking for innovation opportunities
• The Integration Process
• Linking resources and competencies
• The Renewal process
• Challenging its own beliefs and practices

Source GOSHAL, S., BARTLETT, C.A. Building
Organizational Capabilities
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THE RENEWAL PROCESS
Inspiring Energizing Through the Vision
THE INTEGRATION PROCESS
Linking best Practices across units
Managers role
Source GOSHAL, S., BARTLETT, C.A. Building
Organizational Capabilities
THE ENTREPRENEURIAL PROCESS
Innovation Pursuing Opportunities
Coaching Supporting Initiatives
Questioning Challenging Finger-in-the-pie
Front-line Managers
Middle Managers
Executives Managers
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New Organization ModelNew Management Roles

• ENTREPRENEURS
• COACHES
• LEADERS

Source BARTLETT, C.A. GHOSHAL S. The Myth of
the Generic Manager
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New Organization ModelWhat does it take?

• LEADERSHIP
• TALENT
• CULTURE

Source BARTLETT, C.A. GHOSHAL S. The Myth of
the Generic Manager
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LEADERSHIP ORGANIZATION
CULTURE VALUE
PROCESSES TOOLS
INNOVATION EFFECTIVENESS
PEOPLE SKILLS
EVERYTHING IS LINK TOGETHER
Source Loewe, P. Dominiquini, J Overcoming
the barriers to effective innovation Strategy
Leadership
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New Organization ModelWhat does it take?

• LEADERSHIP
• more responsibilities handed down to the
  workforce at large, many more people than before
  are having to exercise authority.
• TALENT
• hold on knowledge workersessentials to its
  operations and who are not motivated only by
  money.
• CULTURE
• the compass that steers employees in the way
  the organisation wants them to go, is its
  culture.

Source The Economist The new organisation a
survey of the company
64
New Organization Model

• Configuring
• Structure
• Processes
• Reward systems
• People practices policies

TO SUPPORT A NEW STRATEGY
How can we get organized to deliver on the
strategy?
Source Galbraith, J al Designing Dynamic
Organization Chapter 1 Getting started
65
New Organization Model

• To the reconfigurable organization
• Active leadership
• The organization as a source of competitive
  advantage
• Knowledge management
• Collect and share knowledge across boundaries IT
  connected
• Learning
• People who have learning aptitude and can move
  around
• Flexibility
• And more changes to come tolerance for ambiguity
  and unpredictability

TO RESPOND TO AN EVER-CHANGING ENVIRONMENT
Source Galbraith, J al Designing Dynamic
Organization Chapter 1 Getting started
66
What is it all about?

• Get organized make it work
• To get the job done!

STRUCTURE
PROCESSES
67
What is it all about?

• Get the right people at the right place
• To get the job done!

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What is it all about?

• People
• To get the job done!

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THANKS!