Sunday, October 13, 2013

Is “Structure Following Strategy" still Valid?

Neither strategy nor structure is static; they are stable enough to execute and they are agile to the changes.

It is a truism to say that no strategy is valid for all times. On the top of this, a globally competitive environment tends to reduce the time span. The strategy needs continuous fine-tuning, periodic updating, and even a new strategy if demanded; 

Whereas business structures are more stable in organizations, still, the digital technology breaks through the functional silos and cross-functional collaboration becomes new normal. So, in such circumstances, is ‘structure following strategy’ still valid?

Strategy vs. Structure: Strategy is often set in the boardroom or senior level roundtable, in a few meetings over a short period of time. The structure is set organically over time through a million little decisions, most taken without sight of the bigger picture but all infused with the culture of the company.

Strategy, Structure and Business Performance: The correlation between strategy, structure, and performance can be figured out via asking a series of questions:
1) How much does the Strategy impact on Business Performance?
2).How much does the Structure impact on Business Performance?
3).What is the cause and effect relationship between Strategy and Structure that impact on Business Performance?

There is a key difference between digital and industrial organizations: In industrial organizations, the structure is rigid and hard to change. In an environment where change is constantly happening, that handicaps the organization; In the emerging digital organizations, the business leverage social/mobile/cloud/analytics technology and tools in enforcing holistic thinking, cross-functional collaboration and dynamic processes and case management.

Modern Information Management soothes the key business processes and ensure the right information being accessed by the right people at the right time and location, one of the main sticking points is that business still tend to associate structure with assets owned by the corporation, IT has made collaboration among supply chain partners, distribution channel partners, and other external entities in the value chain much more accessible, so the notion that "structure follows strategy" might need to be updated

Change Management is multi-dimensional –structure, behavioral process and cultural, etc.  Strategies are longer-term, so change is rarely dramatic, and if dramatic, certainly the structure must change to accommodate. However, there are also occasions where a structure can be first put in place, which will enable new strategies to be conceived. Such changes are normally required in all three dimensions- structure, behavioral processes and culture. 

For organizational effectiveness, the right structure is necessary, but might not be sufficient by itself. Behavioral processes of individual motivation, interpersonal relations, teamwork in divisional, functional and geographical groups; inter-divisional and inter-functional relations; and positive interface with the environment are also necessary.

Business Agility takes agile strategy & structure, and seamless execution as well. Business agility is the organizational capability to adapt to the changes and manage opportunities and risks accordingly. The ubiquity of information has provided both growth opportunities and increasing RISKS to organizations. Therefore, it takes systematic thinking and planning upon strategic fit, structural capability, risk intelligence and executable business model.


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