Consulting - Stanford Strategic Framework for Matrix Structures


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Consulting - Stanford Strategic Framework for Matrix Structures

  1. 1. Strategic Execution Framework – VP of Operations<br />This document has been prepared for the role of the VP of operations for a fast-growing company in India.<br />Objective: align the company strategy with its current projects, meet the operations and profit goals and prepare the organization for a rapid and aggressive expansion. I surveyed the existing organizational structure and the resources that the VP of Operations would need to manage in order to suggest the best structure to fit its culture and strategy. <br />Within a Matrix organization, the VP of Operations will lead severalProject Managers simultaneously and he will help them to get the resources from several Functional Departments, to keep the projects on track, and he will supervise and interact with each Functional Manager. <br />He will have a direct communication with the COO and he will communicate directly with Functional Managers (VP Level) and Project Managers. He will be responsible for managing the Project Managers to accomplish their projects on time, with the quality specified and within budget. Influence people will be one ofthemost important functions. <br />He will bring the experience and the ability to create and lead a very efficient matrix organization structure, capable to handle approximately 50 projects simultaneously and support the company rapid and projected growth.<br />This document shows how the VP of Operations can help the company to align its culture, strategy and structure to meet the company’s strategic goals. The document shows effective management techniques that I learned while I was completing my advanced project management certification at Stanford University.<br />The VP of Operations will have to provide leadership, planning, direction, managing costs and tracking progress for almost 50 projects simultaneously, (2000 units per project) and be responsible for the execution of the organization strategic goals.<br />Francisco J. Gonzalez<br />Mr. Gonzalez holds an Advanced Project Management Certification from Stanford University, a BS of Architecture from the University of Buenos Aires and he attended a Masters in Real Estate Development at Universidad Politecnica de Madrid. Francisco has executed an extensive number of complex transactions in United States and Latin America and he has broad experience in project management, acquisitions, strategic planning, business consulting, financial management, marketing & portfolio management, across different Investment sectors. During his career, he has led projects valued in excess of $500 million dollars. Mr. Gonzalez was previously a founding partner and Development Director at Baresa (BA Real Estate SA), where he led the development and management of well known residential and mixed-used projects in Argentina. He currently act as a Board member.<br />
  2. 2. STRATEGIC FRAMEWORK<br />Strategic Execution Framework <br />The Strategic Execution Frameworks (SEF) is a powerful management model that will help ensure that your critical initiatives are on track to achieve their intended results.<br />
  3. 3. CULTURE<br />THE FOUR ARCHETYPAL ORGANIZATIONAL CULTURES<br />COMPETENCE<br />Achievement<br />Top Performers<br />The Work<br />How?<br />Expertise<br />Work Projects<br />Competitiveness<br />Organizationalmastery of PM requires the co-alignment of Strategy, Structure and Culture in the Environment Domain.<br />
  4. 4. CULTURE<br />An organization’s “culture egg”<br />Doing projects with heavy control<br />In the Mind of Customers<br />Unleashing very creative people<br />In the mind of your employees<br />Draw the Culture egg for VBHC<br />Company Culture Egg<br /><ul><li>It is a start-up development and construction company.
  5. 5. Itseeks to exploit a niche that has not yet been attended.
  6. 6. Itplans to run approximately 50 projects simultaneously at various stages of development. 1 Million Units in 10 years / 2000 units per project
  7. 7. It seeks to achieve scale economies and efficiencies in using scarce equipment and people.
  8. 8. Most company’s specialist are dedicated to a project team and must be shared across projects.
  9. 9. Specialists reports to PM and Functional Managers
  10. 10. PMs negotiate with one another to reserve functional resources
  11. 11. PMs evaluate the performance of people working in their team
  12. 12. Specialists are organized in functional Silos but they are allocated to different projects.</li></li></ul><li>Fundamental Strategy – Alignment with Culture<br />STRATEGY<br />Higher Revenues<br />Complex systems/ differentiation<br />Lower Costs<br />Volume operations/ cost leadership<br />Cost Leadership Strategy<br />Becomethe industry cost leader through “ volume operations”<br /><ul><li>Increase market share to build scale economies
  13. 13. Grow sales
  14. 14. Acquire competitors
  15. 15. Invest in driving down the cost of processes
  16. 16. Design, manufacturing, sales, purchasing, logistics…
  17. 17. Focus on lowest cost</li></ul>By getting bigger the company is allocating fix costs over a bigger product base and the costs come down as the volume goes up.<br />Your power of negotiation increase is you manage several projects.<br />
  18. 18. Does your strategy align with your Culture ?<br />STRATEGY<br />Note: Based on my understanding you would like to have a Collaboration Culture, with Horizontal decentralization, but I believe that your strategy is a Product Leadership strategy that is the perfect fit for a MATRIX STRUCTURE<br />In order to achieve your goals the strategy should be aligned with your Culture. My first impression is that a Competence Culture is more appropriate for the type of company that you are creating and the amount of projects that you are planning to run simultaneously.<br />You will have teamwork and collaboration but the company will operate as a factory to handle 50 projects simultaneously.<br />
  19. 19. STRUCTURE<br />Elements of the organization structure<br />Decision making<br /><ul><li>Individual Positions
  20. 20. Unit Grouping
  21. 21. How the unit is grouping? By function, product or project?
  22. 22. Decision making
  23. 23. Where the decisions get made?
  24. 24. Incentives
  25. 25. Outcome vs. Process?
  26. 26. Individual vs. Group?</li></ul>Where the decisions get made?<br /><ul><li>Vertical vs. Horizontal decentralization</li></ul>Vertical decentralization: The decisions are made at the top or decisions are made at every level. They delegate autonomy to workers.<br />Horizontal decentralization: There is a group of specialized functions. Each functional department creates rules. The CEO delegates horizontally to staff support groups who can create processes, rules, guides, procedures, etc.<br />How much Horizontal decentralization?<br />How many specialized functional divisions?<br />Who thinks vs. who does?<br />In collaboration cultures people are often compensated by processes. (If you accomplish with all the processes you will be compensated. You can be compensated if you are a good player. They use 360 evaluations)<br />In Competence and Control Cultures we can see rewards compensated by outcomes. <br />
  27. 27. STRUCTURE<br />Matrix structure – managers have two/+ bosses<br /><ul><li>Matrix Structures can balance two competing objectives
  28. 28. Be highly responsive to changing customer/ market needs.
  29. 29. Nurture and share high levels of technical excellence.
  30. 30. Matrix Structures can support twin strategic objectives
  31. 31. Produce technically differentiated projects
  32. 32. Support lower costs through better allocation of resources.</li></ul>Problems to overcome in Matrix Structures<br />
  33. 33. Strong Vs. Weak Matrix Structures (Which one is more appropriate for this company?)<br />STRUCTURE<br />“ Strong Matrix”– (emphasizes project control)<br />“ Weak Matrix”– (emphasizes functional control)<br />In this matrix people is still living in the functional departments. The loyalty is to the functional manager.<br />
  34. 34. STRUCTURE<br />Matrix Structures : the fundamental tradeoff<br />Co-located, empowered project teams<br />Discipline-based, functional silos<br />Weak means that the project direction is weak and the functions direction is strong<br />Strong means that the project direction is strong and the functions direction is weak<br />Matrix strength<br />Strong Matrix<br />In this matrix primarily the people are aligned to projects with a weak functional overlay. The Roles and responsibilities as such the people view their primary loyalty to their project manager and that will influence the day by day decisions. Who decides the allocation of people in the organization? The most aggressive PM will get the resources. The success as a PM handles in negotiate for good people.<br />Weak Matrix<br />In this matrix primarily we want technical excellence. With very stable and predictable markets with life cycles in decades, a functional organization works fine.<br />If a company has 100 projects and each one in a different stage of the cycle you need a matrix where the PM and FM negotiate and also a PM will negotiate with other PM and they can do it in a variety of ways. Sometimes senior executives assign resources to the projects based on necessities and strategy.<br />
  35. 35. STRUCTURE & STRATEGY<br />Aligning structure with strategic value discipline<br />Matrix Strength<br />Product leadership<br />Weak matrix structure<br />Weak matrix aligns with Competence culture<br />
  36. 36. Current Organizational Structure<br />STRUCTURE<br />MANAGEMENT TEAM<br />Design / Engineering / Construction<br />Specialized Support Functions<br />Business Organization<br />Regional CEO Western Region 2<br />Regional CEO Kama taka<br />Regional CEO Andhra Pradesh<br />Regional CEO Tamil Nadu<br />Regional CEO Western Region 1<br />Managing Director<br />Director Operations<br />Chief Technology Officer<br />VP Operations<br />VP Design & Planning<br />Head Technical<br />VP Materials & Contract<br />Head Corporate Relationships<br />National Sales Head<br />Chief Financial Officer<br />Head School System/ Training<br />Land Acquisition,<br />North India<br />Head Structural Engineering<br />Resident Architect<br />Sustainability Architect 1 <br />Industrial construct <br />Sustainability Architect 2 <br />Planning <br />
  37. 37. Functional Departments (Silos)<br />STRUCTURE<br />Functional Departments<br />Managing Director<br />Board of Directors<br />PMO Office<br />COO<br />Design & Planning Department<br />Engineering Department<br />Financial Department<br />Legal Department<br />Sales & Marketing Department<br />Development & Operation Department<br />Construction Department<br />Specialized Support Functions<br />Master Planning Department<br />Construction Management<br />Zoning and Land Use<br />Marketing<br />Financial Management<br />HHRR Department<br />Sales<br />Corporate Relationships<br />Design Department<br />Equipment & Technology<br />Corporate<br />Comptroller<br />Support Functions<br />Design-Build Department<br />Real Estate<br />Acquisitions & Procurement<br />Technology Department<br />Estimating Department<br />Policy & Business Integration<br />Design, Production & Operations<br />School System/ Training<br />Health, Safety & Environment<br />Accounting Department<br />Quality Assurance Office<br />
  38. 38. MATRIX ORGANIZATIONAL STRUCTURE<br />STRUCTURE<br />Director of Operations<br />Design & Planning Department<br />Engineering Department<br />Financial Department<br />Legal Department<br />Sales & Marketing Department<br />Construction Department<br />Development & Operation Department<br />Specialized Support Functions<br />Project N 1<br />Project N 2<br />Project N 3<br />Project N 4 (pipeline)<br />Project N #<br />Director of Operations<br />Functional Staff allocated to a project<br />Functional Managers<br />Design & Planning Department<br />Engineering Department<br />Financial Department<br />Legal Department<br />Sales & Marketing Department<br />Construction Department<br />Development & Operation Department<br />Specialized Support Functions<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Project Manager<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Project Manager<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Project Manager<br />Staff<br />Vaibhava<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Staff<br />Blue boxes represent staff engaged in project activities<br /><ul><li>Employees move between functional & project departments
  39. 39. Members of 2 organizations
  40. 40. PM’shave primary control over resources and project direction
  41. 41. Functional mangers = advisory role
  42. 42. Functional managers supervise plan and goals as set by PM</li></ul>Project Coordination<br />
  43. 43. Direct Functional Communication Chart (VP of Operations)<br />STRUCTURE<br />Managing Director<br />COO<br />Design & Planning Department<br />Engineering Department<br />Financial Department<br />Legal Department<br />Sales & Marketing Department<br />Construction Department<br />Development & Operation Department<br />Specialized Support Functions<br />VP Design & Planning<br />Sales & Marketing Director<br />Head of Technical<br />Legal Director<br />Chief Financial Officer<br />VP of Construction<br />VP of Operations<br />COO<br />Regional CEO Kama taka<br />Regional CEO Andhra Pradesh<br />Regional CEO Western Region 2<br />Regional CEO Tamil Nadu<br />Regional CEO Western Region 1<br />VP of Operations<br />FUNCTIONAL DEPARTMENTS<br />VP Design & Planning<br />Sales & Marketing Director<br />Head of Technical<br />Legal Director<br />Chief Financial Officer<br />VP of Construction<br />Head Corporate Relationships<br />PROJECTS<br />Project Coordinator<br />PROJECT N1<br />Chief Technology Officer<br />Senior Project Manager Construction Manager<br />PROJECT N2<br />Head School System/ Training<br />Senior Project Manager Construction Manager<br />PROJECT N….50<br />HHRR Director<br />Senior Project Manager Construction Manager<br />
  44. 44. Resources by Functional Departments<br />STRUCTURE<br />COO<br />Design & Planning Department<br />Engineering Department<br />Financial Department<br />Legal Department<br />Sales & Marketing Department<br />Construction Department<br />Development & Operation Department<br />Specialized Support Functions<br />VP Design & Planning<br />VP of Operations<br />Head Corporate Relationships<br />Sales & Marketing Director<br />Head of Technical<br />Legal Director<br />Chief Financial Officer<br />VP of Construction<br />Real Estate Attorney<br />Marketing Specialist<br />General Account Manager<br />VP Materials & Contracts<br />Urban Planner<br />Head of Structural Engineering<br />Chief Technology Officer<br />Projects Coordinator<br />Master Planner<br />Senior Project Manager<br />Zoning and Land Use Att<br />Market <br />Analyst<br />Safety Director<br />Head School System/ Training<br />Senior Architect<br />Industrialization of Construction<br />Deputy Comptroller <br />Construction Manager<br />Corporate Attorney<br />Graphic Designers<br />Chief Estimator<br />Sustainability Architect<br />Deputy Director FM<br />Environmental Engineers<br />Web Designers<br />PROJECT N1<br />Landscape Architect<br />Construction Management Director<br />Lobbyist / Expeditors<br />Event Manager<br />Deputy P & B.I.<br />Traffic Engineer<br />Interior Designer<br />CRM<br />Deputy Chief Acquisitions Officer & Director Procurement<br />Interior Decorator<br />PR Communication Manager<br />Structural Engineer<br />Civil Engineer<br />Electric Engineer<br />Mechanical Engineer<br />Geotechnical Engineers<br />Surveyor<br />
  45. 45. Planning, Design and Engineering Department Organization<br />STRUCTURE<br />Engineering Department<br />Design & Planning Department<br />Design, Production & Operations<br />Design Department<br />Design-Build Department<br />Master Planning Department<br />Head of Technical<br />VP Design & Planning<br />Senior Architect/s<br />Senior Architect/s<br />Urban Planner/s<br />Head of Structural Engineering<br />Architect/s<br />Architect/s<br />Master Planner/s<br />Industrialization of Construction<br />Environmental Engineers<br />Sustainability Architect/s<br />Sustainability Architect/s<br />Landscape Architect/s<br />Landscape Architect/s<br />Interior Designer/s<br />Interior Designer/s<br />Interior Decorator<br />Interior Decorator/s<br />CAD Operators Rendering<br />CAD Operators Rendering<br />Traffic/ Transportation Engineer<br />Traffic Engineer<br />Structural Engineer/s<br />Structural Engineer/s<br />Civil Engineer/s<br />Civil Engineer/s<br />Electric Engineer/s<br />Electric Engineer/s<br />Mechanical Engineer/s<br />Mechanical Engineer/s<br />Surveyor<br />Surveyor<br />Geotechnical Engineers<br />
  46. 46. Construction Department Organization<br />STRUCTURE<br />Construction Department<br />VP of Construction<br />Construction Management<br />Purchasing Department<br />Estimating Department<br />Health, Safety & Environment<br />Equipment & Technology<br />VP Materials & Contracts<br />CM Director<br />Safety Director<br />Head of Technical<br />Chief Estimator<br />Procurement Manager<br />Senior Estimator<br />Estimator<br />Health, Safety & Environmental coordinator<br />CM 1<br />Purchaser Coordinator<br />Senior Project Superintendent<br />Health, Safety & Utilities coordinator<br />Assistant Estimator<br />Quantity Surveyor<br />Receptionist<br />Project Superintendent<br />Safety & Claims Administrator<br />Scheduling Coordinator<br />Assistant Project Superintendent<br />Assistant Scheduling Coordinator<br />Project Engineer<br />Site Administrator<br />Foreman<br />Laborers<br />Operators<br />PROJECT N1<br />
  47. 47. Financial and Accounting Organization<br />STRUCTURE<br />Quality Assurance Office<br />Financial Department<br />Chief Financial Officer<br />Financial Management<br />Comptroller<br />Acquisitions & Procurement<br />Policy & Business Integration<br />Deputy Chief Acquisitions Officer & Director Procurement<br />Deputy P & B.I.<br />Deputy Comptroller<br />Deputy Director FM<br />Financial Operation Division<br />Policy Integration<br />Resources Planning Division<br />Contract Management Division<br />Analysis Reconciliation Division<br />Financial Information Management<br />Budget Formulation & Policy Branch<br />Procurement Operations Division<br />Business Process Management<br />Institutional Analysis Branch<br />Procurement Analysis Division<br />Strategic Investments Division<br />Accounting Department<br />Strategic Planning Branch<br />General Manager Accounting<br />Treasurer<br />Program Analysis Branch<br />Senior Support Assistant<br />Cost Analysis Division<br />Taxation <br />Payroll Supervisor<br />Accounts Payable Supervisor<br />Accounts Payable Clerk<br />
  48. 48. Sales, Marketing & Legal Organization<br />STRUCTURE<br />Lobbyist / Expeditors<br />Legal Department<br />Claims/ Litigation<br />Legal Director<br />Corporate<br />Real Estate<br />Zoning and Land Use<br />Z & LU Legal Director<br />Contracts / JV / etc<br />Due Diligence Attorney<br />Z & LU Attorney<br />Closing Attorney<br />Sales & Marketing Department<br />Sales & Marketing Director<br />Marketing<br />Support Functions<br />Sales<br />Marketing Specialist<br />In-house Sales Force<br />Graphic Designers<br />Web Designers<br />Market Analyst<br />Event Manager<br />CRM<br />PR & Communication Manager<br />