Wednesday, March 19: Agenda

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Wednesday, March 19 Agenda

• Crafting strategy organizational
  configuration strategic alliances - recap
• Machine configuration technology
• Team projects
• Diversified configuration

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crafting vs. formulating

• allows for the piece of art which is harnessing
  emergent or unplanned events, behavior, and/or
  activity, and addition to plans
• occurs by merging thoughts and action, control
  and learning, planned and unplanned, all at the
  same time - feeling your way toward the future
  while allowing patterns to develop from
  experience

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• speaks to using knowledge and experience to put
  forth a living strategy that is dynamic and open
  to change
• relies on past pattern and future plans, being
  aware of changes that dictate needs for change,
  and managing the change

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R10.1 Collaborating to Compete

• (Global) business success increasingly requires
  inter-firm collaboration.
• There are many types of/reasons for (6 Ls!)/
• potential problems with collaboration.

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Suggestions drawn from Chapter 10

• careful partner choice
• strength in each partner
• win-win negotiation approach
• clear yet evolving goals/roles
• periodic planned evaluation
• built-in conflict resolution mechanisms

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More suggestions from Chapter 10

• planned sequencing exit strategies
• tolerance of diversity
• importance of trust
• use as a strategic learning tool

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Organizational Configurations

• naturally occurring structures
• resulting from clusters of orgl components
  (elements of configuration - basic parts,
  coordinating mechanisms, design parameters,
  situational factors) co-occurring
• reflect external and internal strategic fit, so
  the elements of structural design cannot be
  freely chosen independently -
• produces a limited number of configurations,
  limits on adaptation

mix and match
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Understanding configurations . . .

• Helps us craft strategies --
• in real time, tapping internal talent, and
  mutating the direction along the way --
• as we navigate our way within
• and guide our organization toward
• desirable strategic objectives.

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Mintzbergs configurations

• 1. Machine
• 2. Diversified
• 3. Entrepreneurial
• 4. Innovative (Adhocracy)
• 5. Professional
• 6. Missionary
• 7. Political

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Impressions of the machine . . .

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External environment conditions favorable to the
machine . . .

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Characteristics of mature industries

• slowed growth rate
• many capable rivals
• over-capacity concerns
• industry consolidation
• market share wars
• price competition
• harder to differentiate
• astute buyers
• price sensitivity

• declining industry profits
• importance of scale economies
• importance of cost reduction, process innovation,
  global opportunities, clear strategy with solid
  execution

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The Machine Organization (R14.1)

• Key part
• Main coordinating mechanism

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Roles of some basic parts of the machine . . .

• Operating core
• Technostructure
• Middle line
• Strategic apex

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Strategy making in machine organizations

• Classic top-down approach classic
  formulation/implementation dichotomy
• Formulation at the top - by strategic apex, with
  input from planning specialists (can serve
  valuable roles in strategy here)
• Implementation at lower (especially operating)
  levels

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Strategic planning

• as an ? oxymoron ?
• in machine organizations?
• Strategy becomes a starting point rather than an
  ending point in the process i.e., strategic
  programming.

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Machine organizations . . .

• As instruments of control
• environment ? leadership ?
• ?_____________________________
• As closed systems
• Major vulnerability lack of major ?
• (High efficiency requires a very
• tight internal strategic fit!)

ORGANIZATION
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Lingering questions . . .

• How can machine organizations be improved -- and
  still maintain internal fit and efficiency?
• Do industry leaders in mature industries need the
  machine configuration?
• Is the machine mentality taking over in many
  industries/organizations/cultures today?
  (Globalization ? mega-machines!)

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How to accomplish major change in machine
organizations?

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Customizing Customization(R9.1)

• the logic of aggregation vs.
• the logic of individualization

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Standardization-customization continuum

• (begin customizing on downstream end)
• design 1. Pure standardization
• ?
• fabrication 2. Segmented standardization
• ?
• assembly 3. Customized standardization
• ?
• distribution 4. Tailored customization
• 5. Pure customization

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Avoiding the Pitfalls of Emerging Technologies
(R9.2)

• Pitfalls for established firms
• 1. delayed participation
• 2. sticking with the familiar
• 3. reluctance to fully commit
• 4. lack of persistence

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Advice for adopting emerging technologies in
established firms

• Be attentive to weak signals from the periphery
• be open to diverse viewpoints
• challenge existing assumptions
• reward experimentation
• manage a set of new options
• proceed in stages
• separate new endeavors from trappings of the
  existing organization
• ???

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The Diversified Organization (R17.1)

• Major differences compared to machine?
• Advantages? Disadvantages?
• Key part
• Main coordinating mechanism

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Strategy-making in diversified organizations

• Roles of HQ
• - performance control coordination via
• standardized output control (financial
• measures)
• - corporate strategy development
• - resource allocation
• - appointment of division managers
• - support services

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Strategy-making in diversified organizations

• Roles of division managers
• (implied/relative decentralization)
• - business-level strategy
• - fully develop the division
• - tell and sell to HQ
• - fit in to the corporate strategy
• - drives organization toward machine

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Conditions leading to diversified organizations

• organizational size
• organizational age
• broad geographical scope
• client diversity
• product diversity

• market maturity
• managerial opportunism
• fads
• internal synergies
• leveraging skills

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Troubling questions . . .

• Is bigger better?
• Can HQ really understand many divisions?
• Does centralized financial control over-
• power decentralized strategic control
• (especially with portfolio management)?
• Are diversified organizations becoming merely a
  collection of machines?

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Reflecting on diversification . . .

• Recall (and use!) Porters 3 Tests for
  successful diversification (R17.3).
• Practice skill transfer and activity sharing -
  rather than portfolio management.- but HOW???!!!
• Being a strong competitor requires competence!
  Focus! Agility!
• Its harder than it looks!