Stretegy Design Effectiveness

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Top Management Role in OrganizationTop Management Role in Organization

Direction, Design, and EffectivenessDirection, Design, and Effectiveness

CEO, Top

Management

Team

External Environment

Opportunities

Threats

Uncertainty

Resource Availability

Internal Situation

Strengths

Weaknesses

Distinctive Competence

Leadership Style

Past Performance

Strategic Direction

Organization

Design

Effectiveness

Outcomes

Define

mission,

official

goals

Select

operational

goals,

competitive

strategies

Resources

Efficiency

Goal attainment

Competing values

Structural Form

learning vs.efficiency

Information and

control systems

Production

technology

Human resource

policies,

incentives

Organizationalculture

Interorganizational

linkages

Source: Adapted from Arie Y. Lewin and Carroll U. St ephens,

Individual Properties of the CEO as Dete rminants of OrganizationDesign, unpublished manuscript, Duke University, 1990; and Arie Y. Lewin

and Carroll U. Stephens, CEO Attributes as Determinants of Organization Design:

An integrated Model, Organization Studies 15, no. 2 (1994): 183-212


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Organizational PurposeOrganizational Purpose

MissionMission

Operative GoalsOperative GoalsOverall PerformanceOverall Performance

ResourcesResources

MarketMarket

Employee DevelopmentEmployee Development

Innovation and ChangeInnovation and ChangeProductivityProductivity

The Importance of GoalsThe Importance of Goals


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Goal Type and PurposeGoal Type and Purpose

Type of Goals Purpose of Goals

Official Goals, mission: Legitimacy

Operative goals: Employee direction and motivation

Decision guidelines

Standard of performance


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Porters Competitive StrategiesPorters Competitive Strategies

BMW

Mercedes

Focused

DifferentiationUniquenessNarrow

SubhikshaFocused Low-Cost

LeadershipLow CostNarrow

Starbucks

Coffee Co.DifferentiationUniquenessBroad

Dell Computer

Air Deccan

Big Bazaar

Low-Cost

LeadershipLow CostBroad

ExampleStrategy

Competitive

Advantage

Competitive

Scope


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Miles and SnowsMiles and Snows

Strategy TypologyStrategy Typology

ProspectorProspector Learning orientation; flexible, fluid, decentralizedLearning orientation; flexible, fluid, decentralized

structurestructure

Strong capability in researchStrong capability in research Values creativity, risk-taking, and innovationValues creativity, risk-taking, and innovation

DefenderDefender Efficiency orientation; centralized authority and tightEfficiency orientation; centralized authority and tight

cost controlcost control Emphasis on production efficiency, low overheadEmphasis on production efficiency, low overhead

Close supervision; little employee empowermentClose supervision; little employee empowermentSource: Based on Michael Treacy and Fred Wiersema,

How Market Leaders Keep Their Edge,Fortune February 6,

1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson,

Strategic Management (St. Paul, Minn.: West, 1995), 100-113; and

Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L.Coleman, Jr., Organizational Strategy, Structure, and Process,

Academy of Management Review 3 (1978), 546-562


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Miles and SnowsMiles and Snows

Strategy Typology (contd)Strategy Typology (contd)

AnalyzerAnalyzer Balances efficiency and learning; tight costBalances efficiency and learning; tight cost

control with flexibility and adaptabilitycontrol with flexibility and adaptability

Efficient production for stable product lines;Efficient production for stable product lines;emphasis on creativity, research, risk-taking foremphasis on creativity, research, risk-taking forinnovationinnovation

ReactorReactor No clear organizational approach; designNo clear organizational approach; design

characteristics may shift abruptly depending oncharacteristics may shift abruptly depending oncurrent needscurrent needs

Source: Based on Michael Treacy and Fred Wiersema,

How Market Leaders Keep Their Edge,Fortune February 6,

1995, 88-98; Michael Hitt, R. Duane Ireland, and Robert E. Hoskisson,

Strategic Management (St. Paul, Minn.: West, 1995), 100-113; and

Raymond E. Miles, Charles c. Snow, Alan D. Meyer, and Henry L.

Coleman, Jr., Organizational Strategy, Structure, and Process,

Academy of Management Review 3 (1978), 546-562


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Contingency FactorsContingency Factors

Affecting Organization DesignAffecting Organization Design

Strate

gy

Environment TechnologySize/

LifeCycle Culture

Organizational Structure and Design

The Right Mix of Design Characteristics Fits the Contingency Factors


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Contingency Approaches to theContingency Approaches to the

Measurement of OrganizationalMeasurement of Organizational

EffectivenessEffectiveness

Organization

Internal

activities

and

processes

Resource

Inputs

Product and

Service

Outputs

Resource-based

approach

Internal

process

approach

Goal

approach

External Environment


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Reported GoalsReported Goals

of U.S. Corporationsof U.S. Corporations

Goa l % Cor por at ionsProfitability 89

Growth 82

Market Share 66Social Responsibility 65

Employee welfare 62

Product quality and service 60

Research and development 54

Diversification 51Efficiency 50

Financial stability 49

Resource conservation 39

Management development 35

Source: Adapted from Y. K. Shetty, New Look at Corporate Goals,

California Management Review 22, no. 2 (1979), pp. 71-19.


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Four Models ofFour Models of

Effectiveness ValuesEffectiveness Values

Human Relations Emphasis

Primary Goal: human resource

development

Subgoals: cohesion, morale, training

Internal Process Emphasis

Primary Goal: stability, equilibrium

Subgoals: information management,

communication

Rational Goal Emphasis

Primary Goal: productivity, efficiency,profit

Subgoals: planning, goal setting

Open Systems Emphasis

Primary Goal: growth,

resource acquisition

Subgoals: flexibility, readiness,

external evaluation

Flexibility

Control

Internal External

STRUCTURE

F

O

C

U

S

Adapted from Robert E. Quinn and John Rohrbaugh,

A Spatial Model of Effectiveness Criteria: Toward a

Competing Values Approach to Organizational Analysis,

Management Science 29 (1983): 363-377; and Robert E. Quinn

and Kim Cameron, Organizational Life Cycles and ShiftingCriteria of Effectiveness: Some Preliminary Evidence,

Management Science 29 (1983): 33-51.


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Contingency EffectivenessContingency Effectiveness

ApproachesApproaches

Goal ApproachesGoal ApproachesIndicatorsIndicators

UsefulnessUsefulness

Resource Based ApproachResource Based ApproachIndicatorsIndicators


Internal Process ApproachInternal Process Approach IndicatorsIndicators



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ORGANIZATION

B

ORGANIZATION

A

Effectiveness ValuesEffectiveness Values

for Two Organizationsfor Two Organizations

Human Relations

Emphasis

Internal ProcessEmphasis

RationalGoalEmphasis

Open Systems

Emphasis

STRUCTURE

FO

C

U

S

FLEXIBILITY

CONTROL

INTERNAL EXTERNAL


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Identifying CompanyIdentifying Company

Goals and StrategiesGoals and Strategies

Company #3

Company #2

Company #1

Strategies

from Porter

Goals from

Exhibit 2.8

Workbook

Activity


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Competing Values andCompeting Values and

Organizational EffectivenessOrganizational Effectiveness

Workshop

Activity

Goal or

subgoal

Performance

Gauge

How to

measure

Source of

data

What do you

consider

effective?

(Example)

Equilibrium

Turnover

rates

Compare

percentages

of workers

who left HRM files

25%

reduction in

first year

1

Open

System 2

3

Human

Relations 4

5

Internal

Process 6

7

Rational

Goal 8

Documents

Stretegy Design Effectiveness