Welcome to "Enabling Success: Organising"!
Hello future Strategic Business Leader! In your SBL journey so far, you’ve learned how to analyze a business and pick a strategy. But here is the big secret: even the most brilliant strategy will fail if the company isn't organized properly to deliver it.
Think of it like a professional football team. You can have a strategy to play "attacking football," but if you put your best goalkeeper in the striker position and don't have a coach to coordinate them, you’re going to lose! This chapter is all about how we arrange the people, processes, and technology to make sure the strategy actually works. Don't worry if this seems a bit abstract at first—we will break it down into simple, real-world pieces.
1. Traditional Organisational Structures
An organizational structure is simply the "skeleton" of a company. It shows who reports to whom and how tasks are divided. Choosing the right skeleton depends on what the business does.
A. Functional Structure
In a Functional Structure, the business is split into departments based on specialized skills, such as Marketing, Finance, and Production.
Analogy: Think of a small local bakery. One person handles the baking (Production), another handles the shop counter (Sales), and another does the books (Finance). Everyone sticks to their specific job.
Pros: High level of expertise in each department and very clear career paths.
Cons: "Silo mentality"—departments might stop talking to each other and only care about their own goals instead of the whole company's success.
B. Divisional Structure
As companies grow, they often split into Divisions. These can be based on Product (e.g., a car company having a "Trucks" division and a "Small Cars" division) or Geography (e.g., "Europe Division" and "Asia Division").
Pros: Decisions are made closer to the customer, and it's easier to see which part of the business is making a profit.
Cons: It can be expensive because you might end up with a Finance team in every single division (duplication of resources).
C. Matrix Structure
The Matrix Structure is where things get a bit "crunchy." Here, employees have two bosses. For example, a marketing expert might report to the Head of Marketing AND to a specific Project Manager.
Quick Review: Matrix structures are common in complex, project-based businesses like advertising agencies or construction firms.
Common Mistake: Students often think the Matrix is the "best" because it's flexible. However, in the exam, remember that it often leads to conflict and confusion because employees are being pulled in two different directions!
Key Takeaway: The structure must follow the strategy. If you want to be a low-cost leader, you need a simple, efficient structure. If you want to be an innovator, you might need a flexible Matrix structure.
2. Modern "Boundaryless" Organisations
Technology has allowed companies to move beyond old-fashioned office buildings. We now see Boundaryless organizations that focus on flexibility.
The Hollow Structure: The company keeps its "core" activities (like strategy and brand management) and outsources everything else (like payroll or manufacturing).
The Virtual Structure: A small "hub" organization that connects to other firms through the internet to deliver projects. It might not even have a physical office!
Did you know? Many famous smartphone apps are run by tiny "virtual" teams while the actual drivers or delivery people are independent contractors. This is a form of organizing for success in the digital age!
3. Business Process Re-engineering (BPR)
Sometimes, a company’s processes are so broken that you can't just "tweak" them—you have to blow them up and start again. This is Business Process Re-engineering (BPR).
The "Blank Sheet" Approach: BPR is not about improving what exists; it’s about asking, "If we started this business today from scratch, how would we do this?"
Step-by-Step BPR:
1. Identify the key business processes (e.g., fulfilling a customer order).
2. Measure the current performance (How long does it take? How much does it cost?).
3. Redesign the process from scratch using technology to simplify it.
4. Implement the new process and monitor it.
Memory Aid: Think of BPR as "Radical, not Incremental." It’s a total makeover, not just a haircut!
4. Outsourcing and Shared Service Centres (SSCs)
To be successful, a company needs to decide what it should do itself and what someone else should do.
A. Outsourcing
This is hiring an external company to handle a specific function (like IT or Janitorial services).
The Big Rule: Only outsource non-core activities. Never outsource the thing that makes you special (your competitive advantage)!
Pros: Cheaper labor, access to expert skills.
Cons: Loss of control, risk to data security, and if the supplier goes bankrupt, you are in trouble.
B. Shared Service Centres (SSCs)
An SSC is like an "internal" version of outsourcing. Instead of every division having its own HR department, the company creates one massive HR "Hub" that serves all divisions.
Key Takeaway: SSCs save money by creating economies of scale and ensuring everyone in the company follows the same rules and standards.
5. The Strategic Role of IT/IS
In the SBL exam, you must realize that Information Technology (IT) isn't just for the "techies"—it is a strategic enabler.
How IT enables success:
1. Cost Reduction: Automating boring tasks.
2. Better Decision Making: Using Data Analytics to see what customers are buying.
3. New Business Models: Moving from a physical shop to an e-commerce platform.
4. Closer Customer Relationships: Using CRM (Customer Relationship Management) systems to track what each customer likes.
Don't worry if this seems tricky! Just remember that whenever a question asks how to improve a business, "Using IT to automate or analyze" is almost always a part of the answer.
6. Summary and Final Tips
Organizing for success is about making sure the "gears" of the business mesh together perfectly. To score high marks in your SBL exam on this topic, always ask yourself:
1. Is the current structure helping or hurting the strategy?
2. Can we use technology to make this process faster or cheaper (BPR)?
3. Should we be doing this work ourselves, or should we outsource it?
Quick Review:
- Functional: Expert but "siloed."
- Divisional: Scalable but expensive.
- Matrix: Flexible but confusing.
- BPR: Starting with a blank sheet of paper.
- Outsourcing: Letting others do non-core work to save money.
Keep going! You are one step closer to mastering SBL. Organising is the foundation upon which great leaders build their success!