Loic sarton csp internet


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Loic sarton csp internet

  1. 1. Strategic Management S3STR401 - Session 9 - Alexandre Perrin Strategy Department - Office 272 (ECE) Tel: 02 40 37 45 56 Mail: aperrin@audencia.com
  2. 2. The syllabus Strategic Management Part 1. Diagnosis Part 2. Choices Part 3. Deployment 1. Scanning the environment 2. Exploring and exploiting capabilities 1. Diversification or Specialisation (Corporate) 2. Managing the portfolio of activities (SBU) 1. Implementing and controlling decisions 2. Managing change for deploying strategy
  3. 3. Implementing and controlling decisions A) Decisions and structures B) Informal control of decisions C) Formal control of decisions
  4. 4. Decisions and structures • ‘Structure follows strategy’ (Chandler 1962) Adapt the organisation according to the strategy • ‘Strategy follows structure’ (Hall & Saias 1980) Existing organisational structure determines strategic opportunities • ‘Structure follows strategy as the left foot follows the right’ (Minzberg 1990) Reciprocal relationship
  5. 5. Organizational structure • Organizational structure describes: Who is responsible for what Patterns of communication and knowledge exchange Skills required to move up the organisation
  6. 6. Nature of organizational structures 1. Formal structures Functional Multidivisional Matrix Multinational 2. Temporary structures Team Projects 3. Informal structures Social networks Communities of practice
  7. 7. Functional structure
  8. 8. Multidivisional structure
  9. 9. A matrix structure
  10. 10. A multinational structure
  11. 11. Comparison of structures XXXXXXXXGlobalisation XXXXXXXKnowledge XXXXXXXXXChange XXXXXXXXControl TransnationalMatrixDivisionalFunctionalCriteria
  12. 12. Nature of organizational structures 1. Formal structures Functional Multidivisional Matrix Multinational 2. Temporary structures Team Projects 3. Informal structures Social networks Communities of practice
  13. 13. Project-based structure • Teams created, undertake the work, then dissolved For large expensive projects or limited time events Constantly changing organisational structure Contains mixture of specialists Disadvantages Possible lack of coordination Proliferation of projects Breaking up teams hinders knowledge accumulation (lost knowledge) Advantages Flexible Good accountability and control (clear tasks/defined time) Real-time knowledge exchange Attract complementary members due to short project times Project MKT FIN QUA SAL COM
  14. 14. Example. Direction de la Recherche Projets de Recherche Chef Projet 1 Chef Projet 2 Chef Projet 3 Chef Projet N Chef Projet 4 CKO Knowlegde coordinator Directeur Adjoint au directeur Directeur d’objectifs Réseaux Directeur d’objectifs Utilisation Directeur d’objectifs des Générales Programme Gaz naturel liquéfié Programme Clients Programme Etudes éco. et générales Programme Transport Programme Distribution Programme Clients industriels Programme Nouveaux marchés Pole Techniques de Transport Pôle Techniques de Distribution Pôle Métrologie et Matériels Réseaux Pôle Qualité et Gaz Pôle Environnement Pôle Etudes cryogéniques Pôle Cogénération – Gaz Naturel pour Véhicules Pôle Gaz pour l’Habitat et le tertiaire Pôle Bâtiment Pôle Génie climatique Pôle industrie Pôle Moyens d’Essais pour l’Industrie Service Certification Pôle combustion, catalyse et mécanique des fluides Pôle téléservice Domotique Pôle procédés atomiques et systèmes Pôle SI gaziers, optimisation et simulation Pôle économie, statistiques et sociologie Laboratoire Prototype Appuis : - Cabinet de Direction - Relation institutionnelles France - Relations institutionnelles Europe - Relations institutionnelles Partenariat industriels - Mission valorisation - Propriété intellectuelle - Mission connaissance, information, veille - Département achat contrôle de gestion - Service achat - Mission QHSE – Normalisation - Equipe prévention sécurité - Département informatique - Service infrastructure Informatique - Service Informatique métier - Service Intranet Groupware - Ressources humaines - Développement des RH - Contrat de travail - Recrutement mobilité - Solidarité - Service logistique Site - Service comptable et financier
  15. 15. Nature of organizational structures 1. Formal structures Functional Multidivisional Matrix Multinational 2. Temporary structures Team Projects 3. Informal structures Social networks
  16. 16. Organization as knowledge transfer • We live and work with static, rational ideas about our organizations… What would an organization be like if it mirrored reality? The Silicon Systems organization chart Silicon Systems at work These diagrams are taken from: Krackhardt, David. “The Strength of Strong Ties: The Importance of Philos in Organizations.” In Nohria & Eccles (Eds), Networks and Organizations. Boston: Harvard Business School Press. 1992, pp.. 216-239.
  17. 17. Social networks • The informal network is not official, however, it has a very important function in a company to understand: Who knows who Givers and takers of information Strong ties and weak ties • 4 key roles in this informal network have been identified: The Central Connector The Boundary Spanner The Information Broker The Peripheral Specialist
  18. 18. The central connector The person everyone in the group talks the most. Difficulty: > finding a way to reward these central connectors > some central connectors, if ineffective, can create bottlenecks.
  19. 19. The boundary spanner Group’s eyes and ears in the wider world = connection with people outside the informal network. Useful when people need to share different kinds of expertise but very rare people…
  20. 20. The information broker He/She connects the various sub-networks in the company He/She knows a lot of people but not very well (weak ties) > A departure of the information broker could be a severe blow
  21. 21. The peripheral specialist Serves as an expert He is not well socialized and not tightly integrated in the informal network Often new hires
  22. 22. What is networking ? • It means building social structures for people who share common interests: social networking (making friends) business networking (selling things and building business relationships) job networking (finding a job) ex. Corporate alumnis (McKinsey) • Knowledge networking is building relationships in order to share knowledge and learn from each other in order to work more effectively.
  23. 23. Implementing and controlling decisions A) Decisions and structures B) Informal control of decisions C) Formal control of decisions
  24. 24. How to coordinate tasks ? • Formal control (Top-down) Coercitive Standardisation of practices Organization chart • Informal control (Bottom-up) Participative Multiplicity of practices Social networks
  25. 25. How to control deployment? RatiosRules Formal control PoliticalRoutines Informal control Output (results) Input (use of resources)
  26. 26. Informal - Social control by middle managers • Social control relies on indirect supervision by: Middle managers Routines • Middle managers : interpret and adjust strategy as events unfold in the organization are responsible for implementing plans determined at the top are bridge between senior executives and lower levels in the organization help change occur advise top management about change.
  27. 27. Informal - Social control by routines • Organizational routines are the “way we do things around here” Persist over time (accumulation of knowledge) Guide people’s behaviour Can become core rigidities • Organizational culture is the basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define an organisation’s view of itself and its environment.
  28. 28. Informal - Political & Power • Power is the ability of individuals or groups to persuade, induce or coerce others into following certains courses of action. • Power is related to Formal aspects Hierarchy Competences Control of strategic resources Decision ability Informal aspects Possession of information & knowledge Social capital
  29. 29. Implementing and controlling decisions A) Decisions and structures B) Informal control of decisions C) Formal control of decisions
  30. 30. Formal – Rules & Processes • A process is a collection of steps that use people to create a service or a product. • It is a description of tasks and outcomes associated with a business activity: Are often expressed with a verb It explains how people are working in the structure
  31. 31. Formal – Ratios • Ratios are selected values on financial statements or objectives completion Financial ratios allow for comparisons: between companies between industries between different time periods for one company between a single company and its industry average Profitability ratios Gross margin Companies = (Revenue - Cost of sales) / Revenue = (Net sales - Cost of goods sold) / Net sales = Operating earnings / Net sales Economic Value Added Companies = (Return on Capital - Cost of Capital) (Capital Invested in Project) Return on capital employed (ROCE) Industry = Profit After Tax (Net Profit) / Capital Employed * 100
  32. 32. Example of formal control : the Balanced Scorecard • A performance management tool: for measuring whether the smaller-scale operational activities (SBU) are aligned with its larger-scale objectives in terms of vision and strategy. focusing not only on financial outcomes but also on the operational, marketing and intangibles inputs. • Four general perspectives have been proposed by the Balanced Scorecard: Financial Perspective Customer Perspective Internal process Perspective Innovation & Learning Perspective
  33. 33. The Balanced Scorecard by Kaplan & Norton
  34. 34. Managing change for deploying strategy A) Why managing change? B) Tools for mapping change
  35. 35. Why change management? 1. The environment is changing… Tendency towards organisational inertia and resistance to change 2. People have difficulty to adapt… Top and middle managers are responsible for strategic change 3. Companies need to implement changes… Evolution of resources Change is successful if it is internalised and owned by those who will implement it
  36. 36. Types of change
  37. 37. Examples of change management for deploying strategy • Adaptation is change that can be accommodated with the current culture Example: Name/logo changing • Reconstruction is change that may be rapid and involve a deep evolution of the organization Example: Divestment / cost cutting program • Evolution is change in the strategy that requires cultural change but in a long term Example: Ethics / Sustainable Dvlpt / Customer orientation • Revolution is change that requires rapid and major strategic but also culture change Example: General Motors in 2008
  38. 38. Managing change for deploying strategy A) Why managing change? B) Tools for mapping change
  39. 39. Tools to manage change Tool 1. The “cultural web mapping”
  40. 40. Mapping the cultural web • The cultural web: a representation of the taken-for-granted assumptions, or paradigm, of an organisation and the physical manifestations of organizational culture. • Can be used to: map current and required culture analyse changes needed for strategic success
  41. 41. Compagnie des Services Pétroliers (CSP) Mapping the cultural web in a medium size company
  42. 42. 1. The cultural web of CSP Paradigm - Engineers clan - Pragmatism - Prospector spirit Symbols - « Impossible Missions » - French vs US Routines - Onsite integration - If successful career is guaranteed Structure - Procedures not well formalized -Decentralized - Direct relations Power - Dominated by Engineers -Acquired on the field
  43. 43. Results of the analysis • CSP is an engineer clan where power is obtained thanks to a rite of passage in the field. • But the core business evolves from oil exploration & onsite measurement to data analysis. What was a peripheral activity becomes core activity Necessity to hire top-level computer analysts Former prospectors not as competitive as external hires These specialists have a different paradigm: Lower commitment than prospectors Lower loyalty Listed on the the stock exchange Need for high-level competence in finance, tax and law
  44. 44. 2. The future cultural web of CSP Paradigm - Engineers clan - Pragmatism Symbols « Impossible Missions » Change of the name Routines Onsite integration Training Structure Formalized chart Power Dominated by Engineers + managers
  45. 45. Pros & Cons of consultants & general manager programs • For the consultants Too radical the change may be rejected by those who are in charge (executive committee) Some good ideas for evolution: CFO, Change the name • For the general manager Seems to be more applicable This company needs evolution not revolution… …even if the real issue is “how the managers of this company can evolve themselves?”
  46. 46. Conclusion on strategy implementation • Controlling strategic decisions is based on formal and informal aspects Formal structure: organization charts + processes + rules Informal structure: social networks + local practices + culture • Managing informal structure is much more difficult than managing formal one Cultural web Leadership from managers
  47. 47. Next week • Final session • Quizz (Sessions 7-9) • JC Decaux Case Study in team