Organization Structure and Strategy

• Company lifespan is shrinking

Organisation Definition

• Different definitions exist, but include these common features:
  • A multi-agent system
  • Identifiable boundaries
  • System-level goals towards which agents contribute

Nadler & Tushman's Definition

• Defines organisations as complex systems connecting inputs (environment, resources, history) with output

System Structure

• The complex system breaks into four interrelated components:
  • Work
  • People
  • Informal structure
  • Formal structure
• Strategy, the pattern of decisions over time, allocates resource deployment responding to environmental opportunities & threats

Effective Output

• Requires both strategy and organisation
• Congruence, where inputs, strategy, and components are aligned, ensures effective output

Organisational Change

• Studying how organisations evolve involves comparing their past and present states, affecting the components and elements of strategy

Organisational Growth

Tushman & O'Reilly Model

• Argues that all organisations grow align an S-curve with 3 stages: innovation, differentiation, and maturity reflecting an evolutionary perspective

Organisational Change Metaphors

Evolution

• Change comes from evolutionary forces of variation, selection, and retention, developing complexity over time

Lifecycle

• Change mirrors the growth of an organism, including birth, maturity, and potential decline

Reasons for Organisational Change

External Factors

• Evolution suggests external factors drive change
• For success, inputs (environment) match the elements of the system (strategy & components)
• Organisations must adapt with environmental shifts to maintain congruence which include
  • Technological advances
  • Government regulations
  • Societal values
  • Political dynamics
  • Demographics
  • Globalisation
  • Pandemics

Adapting to Industry Change

McGahan's Argument

• Organisations must understand and align with industry changes for success

Four Types of Industry Change Perspectives

• A threat to core activities that have historically generated profit as these activities become irrelevant to suppliers / customers
• A threat to core assets that made the organisation unique, when they fail to generate value

Industry Trajectories

• Industries start with creative or progressive trajectories
• Face pressure from customer demands and new technologies which threatens activities
• This pushes industry towards radical or intermediating trajectories that unfold over decades

Internal Factors

• Internal biological lifecycles are the key to change

Tushman & O'Reilly Stages

Entrepreneurial Stage

• Founders develop ideas, seeking capital, and creating a niche
• Processes are introduced for managing staff
• Decision making and coordination are typically informal

Collectivity Stage

• Founders focus on product development and seeking capital
• A family feeling as vision is pursued
• Commitment is built as they work long hours for low pay
• There is informal coordination but more consistency

Formalization and Control Stage

• Guided by formal processes, there is a strict division of labor
• Efficiency of operation, increased professional managers, departments, and levels in the hierarchy

Elaboration Stage

• Managers balance efficiency and innovation
• Empowered lower-level managers and associates exist alongside formal rules and procedures.

Causes of Organisational Change

Changing Workforce

• New skills and expectations
• Retirement
• New CEO
• Increased cultural diversity

Failing Aspirations

• Perception of a discrepancy between current and desired state
  • Affected by past aspirations
  • Past performance vs targets
  • Social comparison with other organizations

Company Survival

Meeks and Whittington Findings

• Being large, growing rapidly, and operating in the appropriate industry support survival
• The most important factor is being able to adapt to changes

Perspectives on Change

Two Kinds of Change

• Changes that people implement in organisations to hit goals
• Changes that naturally occur in organisations

Strategy vs Organisation

Nadler and Tushman Distinction

• Strategy is the pattern of decisions about resource deployment according to environment
• Organisation is the mechanism for enacting that strategy

Reasons to Change

Morgan's States

• Organisations are living organisms with lifecycles
  • Organisations evolve by adapting to survive

Life-Cycles vs Evolution

Life-Cycle Theory

• Change is internal, imminent, and follows a form where key renewal and revival

Evolution

• Congruence model from Nadler & Tushman where success is:
  • Strategy being consistent with environment
  • Congruence between the organization's components

Adjusting to Discontinuity

• The fittest survive until a major discontinuity in an external environment like technology
• Organisations must successfully adjust strategy to survive and explains change

Focus on Change

• Why change happens

Organisations in Crisis

Crisis Definitions

• Crises involve a threat to important goals, uncertainty, and time pressure

Crisis Severity

• Crises are high impact when they involve more important goals and uncertainty about resolution

Causes of Organisational Crisis

• Org crisis can be due to internal factors (properties of organisations)
• Org crisis can be due to external factors (properties of the environment)
  • However, externally-caused crises receive a lot of attention

Cameron et al's focus

• When the resource base shrinks, the organisation is in decline

Broad Approach

• Any occasion when performance is less than ideal.

Patterns of Decline

McMillan and Overall ID

• Decline patterns in organisations
  • Classic Lifecycle Model, the organisation will decline over time as birth, growth and maturity are reached
  • Precipitous decline when specific issues cause a chain of consequences
  • Slow decline when that lead to eventual failure caused by internal and external misalignments

Organisational Failure

Strategic Elements

• Scarcity of resources, unstable goal preferences, and poor strategy options

Failure Triggers

• Organisations fail when they fail to appropriately respond to decline caused by internal & external factors
  • Patterns that were previously successful lead to downfall because prevent managers from seeing world as it is
  • Unable to understand challenges or see the state of the environment, cannot respond appropriately

Perspectives on Organisational Failure

Levels of Organisational Failure

Level 1 - Simple Failure

• Involves simple failures and managers address these if sufficiently aware

Level 2 - Complex Failure

• failures result from a lack of planning and foresight
• if not addressed it can accumulate and lead to the final failure level

Level 3 - Catastrophic Failure

• failures across all levels require major structural corporate transformation to get solved

Model of Premature Organisational Failure

Two causes of failure

• Burnout syndrome due to uncontrolled change
• Premature aging syndrome due to weak leadership

Lecture Notes

• Organisational decline & crisis occurs where uncertainty reaches extreme levels
  • Ignoring sings = Optimism Bias
• Organisation-environment fit is key

Deterministic

• External

Voluntaristic

• Firm specific attributes

1. Institutional Misfit
2. Strategic Misfit

Episodic Change

• Changed, were changed, or died due to survival

The Tempo Theory of Change

• Changes fall into episodic and continuous
• 1)Episodic Change
• occasional interruption driven externally
  • prototypically its a failure to adapt
• 2)Continuous change
  • Modifications driven driven internally
• Episodic change tends to be external, infrequent and discontinuous while continuous change is constant, cumulative

Four Types of Episodic Change

Nadler and Tushman's Model

• Two dimensions
  • Incremental vs strategic
  • Anticipatory or reactive

Alfred P. Sloan's organization building

• Build organisation by strategy, structure and supporting systems

McKinsey 7 S's

• 4 soft and 3 standard

Structural change

• change organizational charts that help in performance

four major organizational structures

• what organisation is trying to do

Entrepreneurial structure

• Organized by one person
  • Founders may not have all data for small firms

Functional structure

• Centralized by tasks

Divisional structure

• Decentralized and organized by geography or product
  • suited for international markets

Matrix structure

• has dual control on tasks and skills
  • Suits innovative products

Pros and Cons of Structural Change

Benefits

• aligned structures can lead to savings, Increased understanding and increased service quality

Disadvantages

• repeated restructuring erodes morale

Formal Hierarchy

• argue that thinking about structuring is wrong since structures can...
• 1 separate actions but is too rigid
• 2 allocate resources but has people self selecting
• 3 cause communication issues, but has instant communication
• 4 modern organizations use more 360 feedback
• 5 modern career management will promote
• 6 has needs for order but may not be valuable.

Mergers and Aquisitions

• M&A's is a general term to consolidated organization due to financial processes
• A merger occurs when to organization make one
• Auquisition is when an organization takes over another

Types of Mergers

• 1 Horizontal mergers two companies compete
• 2 Vertical mergers two customers and supplier
• 3 Generic mergers two businesses serve from same place
• 4 Conglomerate deals two companies have no business in common

M&A's benefits

• growth is fast
  • management cannot do it alone properly
• Synergy builds distribution
  • grow revenue
• diversification produces portfolio's
• Integration is most effective form of economic gain and service
• defensive process and reaction
• deals is a CEOs process

Major Disadvantages

• turnover causes stress an burn out caused by cultures causing issues

GReiner (1988)

• theories of change due to revolution
• weick in Quinn theory focus on change based on trauma

Romanellin and Tushman

• revolutionary changes can change even environments and CEO succession

Klarher and Raisch

• examine change a solution for change and stability

Taxonomy

• identified a rhythm of strategic change

1. regular
2. temporal
3. Puctuated
4. no change

• Meeks and Whittington most companies undergo mergers
• high levels combined can cause employee stress.

ELE WEEK 4 Continuous improvement

Tsoukas and Chia (2002) -Traditional continuous change, need to see the normal state

• Change is a normal process and should adopt to be in organization -Focus on micro processes -
• more attuned people can be able to be adaptive to change that is radical

continious change

• eliminate all change
• Improviziation, a workers action -
• limits exist, only change will occur that lead to superior performance

factors of improv

Organizational 1:An experiment 2: data 3:Memory Group 1: expertise 2 team work Fisher and Barret

• Improvisatiton
• Associated with feeings Obstacles

small action radial

meyerson

• disruptive
• verbal
• opportunitim
• alliance

Ele 5. Change management

lewin forcefield analysis

• unfreezing ,change,freeze

Nadler and Tushman frame

• 1 initializing - vision
  • energy
• then change content -magic leader, ACHieve Change,

Vandeven

Change takes one type

Dialectal

In organization regulated cycle/ recurring models evolutionary process

Burnes

• argues Lwein matters Kotter states change is not simply but his model
• hues models.

Sirkin

hard facts are important

• dici golden biddle
• Act with compassion-personal
• Foster
• sustaining continuity

Change management methods

models on action

LeCTure 6

• organization aldecline is worse than it shud be
• McMillan says factors are outside
• catz & Kahn says leadership failed
• Turnaround - organization attempts to act against decline

two types of actions that can deciline

• strategic
• operational

Turn around spirals model

The innovation leads to decline etc

• Anssell and Boin are practical
• weill said crisis needs 4 capabilities
• stutcliffe said 7 things

-Amsell - you need people

• Lectre 7 zombiew are abletopay back over period of time , change maodels have key 10 things
• Mcmillian said deslice is abetween 2 thing

Probst

• said 4 factors can contribute
• cameron

ELE 7 Notes The study guide you re making has several issues you should go change