Chapter 15 : Designing Effective

OrganizationsJeff Schanze and Khanh Truong

Article Introduction

Avoiding the Guillotine by Gary Hamel

What is an Organization?

• Organization – System of consciously coordinated activities of two or more people

• Unity of Command Principle – Each employee should report to a single manager

• Lowe’s, Sysco, Sprint Nextel

Information on Organizational Charts

• Span of Control – The number of people reporting directly to a given manager

• Staff Personnel – Provide research, advice, and recommendations to line managers

• Line Managers – Have authority to make organizational decisions

• Organizational Chart – Boxes-and-lines illustration showing chain of formal authority and division of labor

Organizational Chart

Board of Directors

Chief ExecutiveOfficer

StrategicPlanningAdvisor

LegalCounsel

President

ExecutiveAdministrative

Director

ExecutiveMedicalDirector

Myth #1…Variety is Bad

• Industrial-era managers valued replication, predictability, and “conformance to requirements”

• Overemphasis on military-style discipline

• This thinking can cause missed opportunities

• Managers should celebrate variety

Myth #2…Experience Counts

• Traditional thoughts and ideas stunt growth

• New employees often bring innovative thoughts and ideas that can enhance a company

• Every committee, task force, project team, etc. should be heavily weighted with young people

Myth #3…Size Matters

• In the past CEOs often felt size mattered

• No correlation between size and profitability

• Porsche vs. Daimler Chrysler

• Mega mergers are not the way

Myth #4…Your Company is its Business Model

• Often a company’s fortunes decline as its initial business model runs out of steam

• Diversify and adapt

Myth #5…The Business Unit Rules

• Companies tend to put all of their eggs in one basket

• Spread talent and resources across the company

Myth #6…Resources Get Allocated

• Generally an idea must survive numerous skeptical executives as it works its way up the management hierarchy

• Focus on resource attraction and not resource allocation

• Fresh ideas should not be overlooked

Myth #7…Innovation is an Exception

• Companies say they innovate, in reality they do not

• Companies do not put as much effort into innovation as they do efficiency

Final Thought

“You can’t simply pull the old beliefs and values up by the roots; rather, you must carefully prune them so you create enough space for the seeds of tomorrow’s opportunities to take root.”

Gary Hamel

Questions?