CHAPTER 11 IMPLEMENTING STRATEGY THROUGH RESTRUCTURING AND REENGINEERING THE COMPANY'S STRUCTURE, LEADERSHIP, AND CULTURE The framework

provides a useful visualization of the key components managers must consider in making sure a strategy permeates the day-to-day life of the firm. The framework suggests that managers focus on six components to ensure effective execution: structure, systems, shared values (culture), skills, style, and staff. These six elements are organized into three basic levels: structure, leadership, and culture. Structuring An Effective Organisation Successful strategy implementation depends in large part on a firm's "primary organizational structure." This refers to the way work is "organized" within an organization or business entity. Primary Organizational Structures and their Strategy-Related Pros and Cons There are five basic primary structures.

Functional Organizational Structure: Functional structures predominate in firms with a single or narrow product focus. Such firms require well-defined skills and areas of specialization to build competitive advantages in providing their products or services. Dividing tasks into functional specialties enables the personnel of these firms to concentrate on only one aspect of the necessary work. This allows use of the latest technical skills and develops a high level of efficiency.

Geographic Organizational Structure: Firms often grow by expanding the sale of their products or services to new geographic areas. In these areas, they frequently encounter differences that necessitate different approaches in producing, providing, or selling their products or services. Structuring by geographic areas is usually required to accommodate these differences.

Divisional or Strategic Business Unit Structure: A divisional/strategic business unit (SBU) structure allows corporate management to delegate

authority for the strategic management of distinct business entitiesthe divisions or SBUs. This expedites decision making in response to varied competitive environments and enables corporate management to concentrate on corporate-level strategic decisions.

Matrix Organization: In large companies, increased diversity leads to numerous product and project efforts of major strategic significance. The result is a need for an organizational form that provides skills and resources where and when they are most vital. The matrix organization provides dual channels of authority, performance responsibility, evaluation, and control. Essentially, subordinates are assigned both to a basic functional area and to a project or product manager. The matrix form is intended to make the best use of talented people within a firm by combining the advantages of functional specialization and product-project specialization.

Product-Team Structure: Cross-functional collaboration has become an increasing concern for companies facing rapid change and global competitors in the 21st century. The product-team structure has emerged as a way many firms are restructuring to meet this challenge. Drawing on the ideas underlying the matrix structure and the divisional/SBU structure, this new approach seeks to allocate people across all functions onto teams that manage a particular product or process.

Guidelines to Match Structure to Strategy The following are some guidelines that emerge from this line of research and the restructuring revolution that has altered the corporate landscape at the dawn of the 21st century.

Restructure to emphasize and support strategically critical activities: At the heart of the restructuring trend is the notion that some activities within a business's value chain are more critical to the success of the business's strategy than others. Strategy provides some guidelines that should influence how an organization is structured depending on which among five different sources of competitive advantage are emphasized in its strategy.

Reengineer strategic business processes: Business process reengineering (BPR) is intended to reorganize a company so that it can best create value for

the customer by eliminating barriers that create distance between employees and customers. It involves fundamental rethinking and radical redesign of a business process. Companies that have successfully reengineered their operations have pursued the following steps: o Develop a flow chart of the total business process. o Try to simplify the process first; eliminate tasks and streamline. o Determine which parts of the process can be automated. o Benchmark strategy-critical activities ; consider outsourcing or reorganizing others. o Design a structure for performing remaining activities ; reorganize/assign people accordingly.

Downsize, outsource, and self-manage: Organizational structure should exist for strategy critical activities. Non-critical activities should be done outside the company whenever possible. Global Strategy provides six useful guidelines to illustrate this section.

Recognize that strategy and structure often evolve in a predictable pattern: The research suggests that: single product firms or dominant product businesses usually employ a functional structure; a firm in several related businesses should employ a multidivisional structure; a firm in several unrelated lines of business should be organized into SBUs; early achievement on a strategy-structure fit can be a competitive advantage.

Organizational Leadership Management is identified with skills and leadership with style. Organizational leadership involves two considerations: strategic leadership, and the management skill to cope with uncertainty. Strategic leadership: Embracing change The leadership challenge is to galvanize commitment among people within an organization as well as stakeholders outside the organization to embrace change and implement strategies intended to position the organization to do so. Leaders

galvanize commitment to embrace change through three interrelated activities: clarifying strategic intent, building an organization, and shaping organizational culture.

Clarifying strategic intent: leaders help stakeholders embrace change by setting forth a clear vision of where the business's strategy needs to take the organization. Strategic intent is an articulation of a simple criterion or characterization of what the company must become to establish and sustain global leadership.

Building an organization: Leaders spend considerable time shaping and refining their organizational structure and making it function effectively to accomplish strategic intent. Since leaders are attempting to embrace change, they are often rebuilding or remaking their organization to align it with the everchanging environment and the needs of strategy.

Shaping organizational culture: Leaders know well that the values and beliefs shared throughout their organization will shape how the work of the organization is done. And when attempting to embrace accelerated change, reshaping their organization's culture is an activity that occupies considerable time for most leaders.

Assignment of key managers A major concern of top management in implementing a strategy is that the right managers be in the right positions to facilitate execution of the new strategy. The characteristics of managers that are probably important in this context include: ability and education, previous track record and experience, and personality and temperament. Organizational Culture Organizational culture is defined as the set of important assumptions (often unstated) that members of an organization share in common. Every organization has its own culture. In much the same way as personality influences the behavior of an individual, the shared assumptions (beliefs and values) among a firm's members influence opinions and actions within that firm.

Leaders typically attempt to manage and create distinct cultures through a variety of ways. Some of the most common ways are described below:

Emphasize key themes or dominant values: Businesses build strategies around distinct competitive advantages they possess or seek. So insightful leaders nurture key themes or dominant values within their organization that reinforce competitive advantages they seek to maintain or build.

Encourage dissemination of stories and legends about core values: Companies with strong cultures are enthusiastic collectors and tellers of stories, anecdotes, and legends in support of basic beliefs.

Institutionalize practices that systematically reinforce desired beliefs and values: Companies with strong cultures are clear on what their beliefs and values need to be and take the process of shaping those beliefs and values very seriously.

Adopt some very common themes in their own unique ways: The most typical beliefs that shape organizational culture include: a belief in being the best, a belief in superior quality and service, a belief in the importance of people as individuals, a belief in the importance of the details of execution, a belief that customers should reign supreme, a belief in inspiring people to do their best, a belief in the importance of informal organizational communication, and a belief that growth and profits are essential to a company's well-being. Every company implements these beliefs differently.

Managing organizational culture in a global organization Organizational culture must recognize cultural diversity. Social norms create differences across national boundaries that influence how people interact, read personal cues, and otherwise interrelate socially. Values and attitudes about similar circumstances also vary from country to country. Religion is yet another source of cultural differences. Finally, education differs across national borders. Managing the strategy-culture relationship

Simple framework for managing the strategy-culture relationship by identifying four basic situations a firm might face: link to mission, maximize synergy, manage around the culture, and reformulate the strategy or culture.