Class 3 The Strategic Design Lens ObjectivesIntroduc

Class 3:
The Strategic Design Lens ObjectivesIntroduce the basic
concepts and approaches of the strategic design perspective on
organizationsProvide overview of fundamental principles of
organizational design at all levels of the organizationIdentify
topics for organizational analyses
*
3 Perspectives on OrganizationsStrategic Design LensSees
organizations as social systems designed to achieve strategic
goalsPolitical LensSees organizations as arenas for conflict and
competitionCultural LensSees organizations as places where
there are social and personal identities carried by people
*
Strategic Design
begins with …
identifying the strategy

After Identifying the Strategy…
3 Building Blocks of Strategic DesignGro uping
StructureLinking MechanismsResource Alignments
*
GroupingDrawing boundaries around clusters of tasks or
activities to define jobs, departments, processesDifferentiation
Grouping StructuresFunctionalDivisional – ProductDivisional –
MarketDivisional – GeographicMatrixFront Back
Dell’s Functional Structure
*
Dell groups all employees who perform tasks related to
assembling personal computers into the manufacturing function

and all employees who handle Dell’s telephone sales into the
sales function. Engineers responsible for designing Dell’s
computers are grouped into the product development function,
and employees responsible for obtaining supplies of hard discs,
chips, and other inputs are grouped into the materials
management function. The functional structure suited the needs
of Dell’s growing company, especially as it battled with
Compaq, now a part of HP, and Gateway for control of the
personal computer market—a battle in which it is currently
winning hands down.
The Functional Structure
AdvantagesCoordinationCommunicationSkill
improvementMotivationControlling
DisadvantagesLimited growth under existing structureLimits to
number of products and servicesCoordination difficulties at
larger size
*
The first issue in organizational design is to choose a division
of labor or way to group different jobs together to best meet the
needs of the organization’s environment, technology, and
human resources. Most organizations group jobs together by
function and thereby develop a functional structure.
A function is a group of people working together who possess
similar skills or use the same kind of knowledge, tools, or
techniques to perform their jobs.
A functional structure is an organizational structure composed
of all the job specializations that an organization requires to
produce its goods or services.

The Exhibit on the next slide illustrates the functional structure
of Dell.
The advantages of a functional structure are a result of the
division of labor and specialization. The advantages can be
categorized as coordination advantages and motivation
advantages. The disadvantages occur as a result of growth in
size. As the firm grows, coordination becomes more difficult.
Divisional Structures
Product
Market
Geographic
*
If an organization grows, it often employs a second grouping by
division and adopts a more complex form. A division is a group
of functions created to specialize in making and selling a
particular kind of good or service.
When an organization groups people and functions so that it can
produce a wide variety of different products, it uses a product
structure. Each product division contains the functions
necessary to service the specific goods or products. A product
structure is illustrated on the next slide.
A market structure groups functions into divisions to respond to
the needs of particular types of customers.
A geographic structure groups functions by location. If it adopts
a global geographic structure, an organization locates different
divisions in each of the world regions in which it operates.

Using a divisional structure solves the problems created by
functional structures when an organization is larger in size.
Product Structure
*
When an organization chooses to group people and functions so
that it can produce a wide variety of different products, it
moves to a product structure. Each product division contains the
functions necessary to service the specific goods or products.
Figure 16.3(a) shows the product structure used by a company
like General Electric, which has many separate product-oriented
divisions—for example, divisions responsible for producing
light bulbs, aerospace products, and appliances. Each of these
divisions has its own set of functions (such as accounting,
marketing, and research and development).
Market Structure
*
Sometimes the most pressing problem facing an organization is
to deliver products to customers in a way that best meets
customer needs. To accomplish this goal, an organization is
likely to choose a market structure and group functions into
divisions to respond to the needs of particular types of
customers. (See Exhibit 16.3B.) For example, companies such
as Staples and Office Max serve individual customers, but they
also have large accounts with small-business customers and
accounts with large companies and government agencies.

Geographic Structure
*
When organizations expand rapidly both at home and abroad,
functional structures can become problematic because managers
in one central location may find it increasingly difficult to deal
with the different issues facing different regions. In these cases,
a geographic structure, in which divisions are broken down by
location, is often chosen (see Exhibit 16.3C). To achieve
Federal Express’s corporate mission of providing next-day mail
service, CEO Fred Smith chose a geographic structure with
regional divisions.
The Divisional Structure
AdvantagesAs size and complexity of organization increases, it
facilitatesCoordinationCommunicationMotivationAutonomy
DisadvantagesIncreased costsDuplication of
functionsMiscommunication across divisionsCompetition for
resourcesConflict
*
This slide lists the advantages and disadvantages of divisional
structures. Although the divisional structure has the advantages
of solving the disadvantages of the functional structure for
larger firms, it can cost more, be less efficient, be subject to
miscommunication, and create conflict and competition between
divisions.

The Matrix Structure
Complex network of reporting relationships among product
teams and functions
People and resources grouped by
Function
Product
*
In a matrix structure, managers group people and resources in
two ways simultaneously: by function and by product.
Employees are grouped by functions to allow them to learn from
one another and become more skilled. Employees are also
grouped into product teams in which members of different
functions work together to develop a specific product.
Each person reports to two bosses: a functional boss and the
boss of their product team. Exhibit 16.4 illustrates a matrix
structure.
A company typically uses a matrix structure for three reasons:It
needs to develop products very rapidly.It needs to maximize
communication and cooperation between team
members.Innovation and creativity are the key to the
organization’s continuing success.
A Matrix Structure
*
Exhibit 16.4 illustrates a matrix structure. The vertical lines
show the functions of an organization, and the horizontal lines
show the product teams responsible for developing or

manufacturing the organization’s products. At the intersection
of the lines are employees who report to both a functional boss
and a product boss. The members of the teams are each
developing a specific product. One team in Figure 16.4 is
working on the Alpha computer workstation for small
businesses; another team is working on the Beta workstation
designed for large corporate customers.
AdvantagesCoordinationFast new product
developmentCommunicationCooperationInnovationCreativityAu
tonomy
DisadvantagesRole conflictRole ambiguityStressUnclear
individual contributions to team performance
*
Members of product teams are generally highly qualified and
skilled employees with advanced degrees and expertise in their
fields. The matrix structure provides a work setting giving
employees freedom and autonomy. These jobs enjoy a high
motivating potential score.
There are several properties that can cause job dissatisfaction.
Two bosses can make conflicting demands on an employee. The
loose system of reporting relationships can make employees
vulnerable to role ambiguity. Role conflict and ambiguity result
in stress.
The matrix structure is associated with the most complex
coordination and motivational issues.

The Front/Back StructureFront end faces the customerFront end
grouped by market (geography or customer)Front end includes
marketing, sales, distribution, customer serviceBack end
organized by productBack end includes product development,
production, logistics
A Wide Span of Control
*
This Exhibit illustrates a wide span of control.
A Narrow Span of Control
*
This Exhibit illustrates a narrow span of control.
LinkingCreating links across organizational
boundariesIntegration
Examples of Linking Mechanisms LiaisonsCross-functional
teamsPermanentTemporary IT systemsFormal reporting
structures & systems

Using a Team to Increase Coordination
*
This Exhibit shows how a team can increase coordination
between functions.
A Cross-Functional Team Structure
*
This Exhibit shows an example of a cross-functional team
structure formed to facilitate mutual adjustment.
AlignmentPositioning elements of the organization (such as
rewards and incentives) to provide access to the resources and
the incentives to do the tasks assigned
Examples of Resource Alignments Performance measurement
systemsRewards & incentivesResource allocation
FinancialHumanCapitalHuman resource developmentTraining &
development

Dynacorp CaseWhat is the strategy or the strategic directi on of
Dynacorp?
*
Dynacorp’s CEO has identified the main problems as…High
costsSlow product cyclesNeed to create more value for the
customer
*
Dynacorp CaseWhat design option would you choose?First
choiceSecond choice
*
Grouping StructuresFunctionalDivisional – ProductDivisional –
MarketDivisional – GeographicMatrixFront Back
Dynacorp Case DiscussionWhich of the problems of the current
design does the proposed design address?What problems would
it not address?Are there any new problems that will be created?

*
Dynacorp Case DiscussionWhat linking and alignment
mechanisms would you propose to make the grouping
arrangement more effective?
*
Take-Aways from DynacorpChanging the grouping structure can
be disruptiveDynacorp needs to weigh the advantages of a new
structure vs. the possibilities of using linking and alignment to
strengthen the existing systemIf Dynacorp chooses a new
structure, its success will also depend on designing effective
linking and alignment mechanisms
*
Team Projects
Criteria for Organizational Analysis ProjectsThe initiative must

already be underway, but not in existence for too long a period
of time (@ 1 year or less than 1 year)The initiative must involve
a reorganization or change in the structure (for ex., different
reporting relationships or new departments) At least 6
individuals who are involved in the initiative must be
individually interviewed (in person, via Zoom or Skype or other
video format following health guidelines)You can choose to do
this individually or within a groupGroups must be @5 people
Examples of Organizational AnalysesProMedicaReorganization
of purchasing function to centralize it ProMedicaIntroduction of
a new department-acute health care delivery at homeUT Dept.
of Environmental Health Combination of 2 departments to
create a new group Flower Hospital Reorganization of the
nursing structure/changing roles Dimensions Credit UnionNew
C-suite level added with new reporting relationships
Final Paper: Grouping Structure Examples
Because the residents left, they were replaced by Nurse
practitioners. Previously, there was a resident available 24
hours to manage care for the stroke patients of behalf of the
Attending MD. Since the change, the residents were replaced by
2 nurse practitioners, who rotate days. These NPs only available

to care for the strokes patients 8a-5p. Since there is no one in
house overnight to care for the patients, the nurses must call the
Attending MD at home if they need anything that cannot wait
until morning. Because the Neuro/Stroke Attending MD cannot
be in house at all times, the ICU team may take over care for
critical stroke patients in the Medical/Neuro ICU while the
Hospitalist (Attending Medicine MD) may take over care for
noncritical stroke patients on the Neuro/Stroke MedSurg Unit.
*
Team Structure
Grouping: Original Alignment
MSP Analytics Manager
MSP Business Analysts (15)
Reporting Analysts (10)
Reporting Analyst Manager
Analysts (6)
RPO R&A Manager
RPO Technology & Analytics Director
President
*
Team Structure
Grouping: New Alignment

Business Intelligence Manager
BI Consultant
BI Consultant
BI Consultant
BI Analyst (4)
BI Analyst (4)
BI Analyst (4)
Reporting Analyst Lead
COO
Technology & Analytics Director
*
Organizational Structure
Before
After

Organizational Analysis ProjectsDiscussion
QuestionsIntroductionsWhy are you interested in this
topic?What thoughts do each of you have about a specific
organizational change initiative that you could study?What
ideas do each of you have about an organization where you
could study this topic/initiative?
RESPOND TO EACH QUESTION WITH AT LEAST 100
WORDS and 1 Reference
Question 1 (Jake)
The technology of self-service is becoming more in use in
multiple different businesses. It is cost effective to the business
and most of the time provides a faster service to the customers.
“Technology provides many benefits but at the same time poses
some key challenges” (2019). Some of the challenges can be
maintaining the equipment and ensuring that it is updated
regularly. Another challenge that is overlooked on the business
side is that people fear that self-service kiosks replace jobs. In
some cases, this might be true, on the business side it makes
sense though to save money on wages and benefits.
An example that I have seen recently is self service kiosks at
the DMV. I know that I am grateful for these kiosks because it
eliminates the long waits inside the DMV. The DMV also puts
them on the outside of their buildings, and this makes them
available for use 24hrs a day. Not everything can be done at the
kiosk but simple transactions like registration renewal can be
done there. These kiosks help bring down the wait time inside

the DMV as well. There can be issues with the software on the
kiosk where is not able to find the registration or other errors. I
know that I have issues with it because of my last name. I have
an apostrophe and the program does not accept the apostrophe
when I enter my information. Most government programs or
websites do not accept it, so I am use to it.
QUESTION 2 (David)
Technology in the past few decades has accelerated much faster
than the previous era where speed, convenience, and efficiency
are the name of the game. Companies now have to find ways to
bring value to their clients to stay relevant in their industry and
leaders who hold onto traditional mindsets without looking
forward may find themselves being less competitive to their
industry peers. Today companies find many ways where they
can reach a larger audience to gain market shares and advertise
themselves online more than ever. Every organization wants to
attract more customers and would entice them with promotions,
discounts, or other benefits. This is especially relevant to retail
businesses that depend on strategic locations and volume
purchases. Chipotle is a Mexican fast-food restaurant that has
grown tremendously successful in the past years. They have
transformed their business model and enabled clients to
download their mobile app to be able to order their food for
pickup or delivery. This saves customers time and keeps them
coming back with rewards. The mobile app also serves as a
marketing tool to showcase new menus and keep customers up
to date with promotions. The online ordering business model
has been so successful for Chipotle as it accounts for nearly half
of its retail business it has started considering pushing for
online ordering and pick-up locations only without sit-in
restaurant retail locations in some key locations (Anderson,
2020). This move was prompted by locations that have little
physical space and where rent is extremely high such as New
York. It has yet to be seen if this would be successful, and there
definitely would be inconveniences for some customers who
prefer dine-in options. Technology is not perfect and there have

been many times where Chipotle's mobile application may face
service issues such as not recording reward points or allowing
orders to be placed where the location was having issues and
did not receive the orders, etc. However, the conveniences of
having this mobile application option in an era where most
people have mobile smartphones do make a lot of sense to
businesses to continue investing in self-servicing technologies.
QUESTION 3 (Nirvani)
Operations management “is the science and art of ensuring that
goods and services are created and delivered successfully to
customers. OM includes the design of goods, services, and the
processes that create them; the day-to-day management of those
processes; and the continual improvement of these goods,
services, and processes.” Collier, D. A, & Evans, J. R. (2019).
A personal encounter I had was with a connecting flight. I was
traveling from Alabama to New York City for vacation, and at
the time, we had a connecting flight to Charlotte, North
Carolina. Alabama is in the central time zone, whereas
Charlotte is in the easter time zone, which puts them an hour
ahead. We did consider our overlay, which will give us 30
minutes to get to the gate and a few extra minutes to spare
before boarding. We were flying during a blizzard on the east
coast, but the airline did not say there would-be cancellations or
delays to the flight; everything showed to be on time. When we
got off our flight at Charlotte and made our way to board the
other flight, there was no one at the gate, and we were told the
flight had left 30 minutes prior due to a break in the weather.
Everyone who had the connecting flight to New York had just
missed their flight. When we approached the help desk, they
were not very nice and insisted it was our fault we missed the
flight, even though we showed them that we were on our first
flight in the air on the way to Charlotte. After going back and
forth with them and who was at fault, we were finally told what
transpired, and they had us shuffling from gate to gate until we
found a flight that we could get.
Some ways in which the airline could have utilized operations

management to help relieve or eliminate the problem is first to
use forecasting “predict the future demand for raw materials,
finished goods, and services” Collier, D. A, & Evans, J. R.
(2019). When the airline use forecasting, it assists them in
determining their flight scheduling during inclement weather. If
they decide the flight schedules can not be met, they need to
adjust their schedule “determine when resources such as
employees and equipment should be assigned to work” Collier,
D. A, & Evans, J. R. (2019). They should alert all
customers/passengers of delays due to weather. And last would-
be sustainability “decide the best way to manage the risks
associated with products and operations to preserve resources
for future generations.” Collier, D. A, & Evans, J. R. (2019).
This allows them to see how best they can deal with the current
risk they are facing and what is the best way to handle it.
Instead, they saw a window during the storm to fly out and did
without alerting customers so they would not be responsible for
customers missing their flights.
QUESTION 4 (Tieara)
One of the worst customer service experiences that I have ever
had happened to me a few months ago. My family and I stopped
at our favorite Chinese food restaurant while visiting Chicago
before we returned home to Indiana and after driving for two
hours we got home and discovered that they gave us the wrong
rice. I have been ordering from this restaurant for over ten years
and on average we spend fifty dollars per visit. I called and
informed them that I we received the wrong food and the man
that answered, who has worked there full-time longer than I
have been frequenting the establishment, and told me that he
wrote down what he thought I said and repeated it back to me
but what he thought he said was not what I nor my family heard
as the call was on speaker. He continued to interject while I was
speaking and was trying to over talk me, I eventually told him
that all he had to say was that "he apologized and that he would
replace my rice the next time I was in town" and he tole me that

he couldn't do that. I then informed him that I would never be
patronizing that establishment again and hung up.
We ultimately ended up having to make our own fried rice and
that made me even more upset. Operations management is
defined as, "Operations management (OM) is the administration
of business practices to create the highest level of efficiency
possible within an organization. It is concerned with converting
materials and labor into goods and services as efficiently as
possible to maximize the profit of an organization. Operations
management teams attempt to balance costs with revenue to
achieve the highest net operating profit possible." (Hayes,
2021). Based on Hayes' definition I was not offered the best
service nor was my problem rectified in the end. I do not like
Chinese food in Indiana and literally have not had Chinese food
since. Also, the restaurant should be focused on receiving the
highest net operating profits and that cannot happen when
customers are not satisfied and have hundreds of people to
complain to. Organizations have to take into account that
twenty years ago when a customer was not happy on average ten
people heard about it, it is not the same now. With social media
and Yelp and the ability to write reviews and have in some
cases millions of people read it, the best service has to be
provided at all times. This could also be why the restaurant has
not franchised into more than one location is the forty years that
they've been opened.
Class 3:
The Strategic Design Lens
Objectives
Introduce the basic concepts and approaches of the strategic
design perspective on organizations
Provide overview of fundamental principles of organizational
design at all levels of the organization
Identify topics for organizational analyses

1
3 Perspectives on Organizations
Strategic Design Lens
Sees organizations as social systems designed to achieve
strategic goals
Political Lens
Sees organizations as arenas for conflict and competition
Cultural Lens
Sees organizations as places where there are social and personal
identities carried by people
2
Strategic Design
begins with …

3 Building Blocks of Strategic Design
Grouping Structure
Linking Mechanisms
Resource Alignments
4
Grouping
Drawing boundaries around clusters of tasks or activities to
define jobs, departments, processes
Differentiation

Grouping Structures
Functional
Divisional – Product
Divisional – Market
Divisional – Geographic
Matrix
Front Back
Dell’s Functional Structure
7
Dell groups all employees who perform tasks related to
assembling personal computers into the manufacturing function
and all employees who handle Dell’s telephone sales into the
sales function. Engineers responsible for designing Dell’s
computers are grouped into the product development function,
and employees responsible for obtaining supplies of hard discs,
chips, and other inputs are grouped into the materials
management function. The functional structure suited the needs
of Dell’s growing company, especially as it battled with
Compaq, now a part of HP, and Gateway for control of the

personal computer market—a battle in which it is currently
winning hands down.
The Functional Structure
Advantages
Coordination
Communication
Skill improvement
Motivation
Controlling
Disadvantages
Limited growth under existing structure
Limits to number of products and services
Coordination difficulties at larger size
8
The first issue in organizational design is to choose a division
of labor or way to group different jobs together to best meet the
needs of the organization’s environment, technology, and
human resources. Most organizations group jobs together by
function and thereby develop a functional structure.
A function is a group of people working together who possess
similar skills or use the same kind of knowledge, tools, or
techniques to perform their jobs.
A functional structure is an organizational structure composed
of all the job specializations that an organization requires to

produce its goods or services.
The Exhibit on the next slide illustrates the functional structure
of Dell.
The advantages of a functional structure are a result of the
division of labor and specialization. The advantages can be
categorized as coordination advantages and motivation
advantages. The disadvantages occur as a result of growth in
size. As the firm grows, coordination becomes more difficult.
Divisional Structures
Product
Market
Geographic
9
If an organization grows, it often employs a second grouping by
division and adopts a more complex form. A division is a group
of functions created to specialize in making and selling a
particular kind of good or service.
When an organization groups people and functions so that it can
produce a wide variety of different products, it uses a product
structure. Each product division contains the functions
necessary to service the specific goods or products. A product
structure is illustrated on the next slide.
A market structure groups functions into divisions to respond to
the needs of particular types of customers.

A geographic structure groups functions by location. If it adopts
a global geographic structure, an organization locates different
divisions in each of the world regions in which it operates.
Using a divisional structure solves the problems created by
functional structures when an organization is larger in size.
Product Structure
10
When an organization chooses to group people and functions so
that it can produce a wide variety of different products, it
moves to a product structure. Each product division contains the
functions necessary to service the specific goods or products.
Figure 16.3(a) shows the product structure used by a company
like General Electric, which has many separate product-oriented
divisions—for example, divisions responsible for producing
light bulbs, aerospace products, and appliances. Each of these
divisions has its own set of functions (such as accounting,
marketing, and research and development).
Market Structure

11
Sometimes the most pressing problem facing an organization is
to deliver products to customers in a way that best meets
customer needs. To accomplish this goal, an organization is
likely to choose a market structure and group functions into
divisions to respond to the needs of particular types of
customers. (See Exhibit 16.3B.) For example, companies such
as Staples and Office Max serve individual customers, but they
also have large accounts with small-business customers and
accounts with large companies and government agencies.
Geographic Structure
12
When organizations expand rapidly both at home and abroad,
functional structures can become problematic because managers
in one central location may find it increasingly difficult to deal
with the different issues facing different regions. In these cases,
a geographic structure, in which divisions are broken down by
location, is often chosen (see Exhibit 16.3C). To achieve
Federal Express’s corporate mission of providing next-day mail
service, CEO Fred Smith chose a geographic structure with
regional divisions.
The Divisional Structure
Advantages
As size and complexity of organization increases, it facilitates

Coordination
Communication
Motivation
Autonomy
Disadvantages
Increased costs
Duplication of functions
Miscommunication across divisions
Competition for resources
Conflict
13
This slide lists the advantages and disadvantages of divisional
structures. Although the divisional structure has the advantages
of solving the disadvantages of the functional structure for
larger firms, it can cost more, be less efficient, be subject to
miscommunication, and create conflict and competition between
divisions.
Complex network of reporting relationships among product
teams and functions
People and resources grouped by
Function
Product

14
In a matrix structure, managers group people and resources in
two ways simultaneously: by function and by product.
Employees are grouped by functions to allow them to learn from
one another and become more skilled. Employees are also
grouped into product teams in which members of different
functions work together to develop a specific product.
Each person reports to two bosses: a functional boss and the
boss of their product team. Exhibit 16.4 illustrates a matrix
structure.
A company typically uses a matrix structure for three reasons:
It needs to develop products very rapidly.
It needs to maximize communication and cooperation between
team members.
Innovation and creativity are the key to the organization’s
continuing success.
A Matrix Structure
15
Exhibit 16.4 illustrates a matrix structure. The vertical lines
show the functions of an organization, and the horizontal lines
show the product teams responsible for developing or
manufacturing the organization’s products. At the intersection

of the lines are employees who report to both a functional boss
and a product boss. The members of the teams are each
developing a specific product. One team in Figure 16.4 is
working on the Alpha computer workstation for small
businesses; another team is working on the Beta workstation
designed for large corporate customers.
Advantages
Coordination
Fast new product development
Communication
Cooperation
Innovation
Creativity
Autonomy
Disadvantages
Role conflict
Role ambiguity
Stress
Unclear individual contributions to team performance
16
Members of product teams are generally highly qualified and
skilled employees with advanced degrees and expertise in their
fields. The matrix structure provides a work setting giving
employees freedom and autonomy. These jobs enjoy a high
motivating potential score.
There are several properties that can cause job dissatisfaction.

Two bosses can make conflicting demands on an employee. The
loose system of reporting relationships can make employees
vulnerable to role ambiguity. Role conflict and ambiguity result
in stress.
The matrix structure is associated with the most complex
coordination and motivational issues.
The Front/Back Structure
Front end faces the customer
Front end grouped by market (geography or customer)
Front end includes marketing, sales, distribution, customer
service
Back end organized by product
Back end includes product development, production, logistics
A Wide Span of Control
18
This Exhibit illustrates a wide span of control.
A Narrow Span of Control

19
This Exhibit illustrates a narrow span of control.
Linking
Creating links across organizational boundaries
Integration
Examples of Linking Mechanisms
Liaisons
Cross-functional teams
Permanent
Temporary
IT systems
Formal reporting structures & systems

Using a Team to Increase Coordination
22
This Exhibit shows how a team can increase coordination
between functions.
A Cross-Functional Team Structure
23
This Exhibit shows an example of a cross-functional team
structure formed to facilitate mutual adjustment.
Alignment
Positioning elements of the organization (such as rewards and
incentives) to provide access to the resources and the incentives
to do the tasks assigned

Examples of Resource Alignments
Performance measurement systems
Rewards & incentives
Resource allocation
Financial
Human
Capital
Human resource development
Training & development
Dynacorp Case
What is the strategy or the strategic direction of Dynacorp?
26

Strategic Objectives
Customer-centric
Recognize market trends/Quicker product development/Faster to
market
To be the leader again
Lower costs
Dynacorp’s CEO has identified the main problems as…
High costs
Slow product cycles
Need to create more value for the customer
28
Dynacorp Case
What design option would you choose?
First choice
Second choice

29
Grouping Structures
Functional
Divisional – Product
Divisional – Market
Divisional – Geographic
Matrix
Front Back
Product division
Strategic Objective: Costs
-duplication of resources
+P&L responsibility to 1 person
+better problem solving
+more efficient communication
+their own best competitor
Strategic Objective: Faster to market
+less time for decision making
+better problem solving
+more efficient communication
+their own best competitor

Strategic Objective: Customer value
-be their own best competitor
+more reliable customer service for certain products
+focused customer service on certain products
+resources focused on product line(s)
Front Back
Strategic Objective: Costs
-delays in product development
-sales incentives go to more negative overall costs
+upselling potential
Strategic Objective: Faster to market
+Closer links between front and back
+Links between manufacturing & engineering at back end
Strategic Objective: Customer value
-customer service not as aware of product development
+customer service focused on all products to customers
Remain Functional
Need new linkages and resource alignments
Training
IT system
Incentives

Human capital added
Dynacorp Case Discussion
Which of the problems of the current design does the proposed
design address?
What problems would it not address?
Are there any new problems that will be created?
34
Dynacorp Case Discussion
What linking and alignment mechanisms would you propose to
make the grouping arrangement more effective?
35

Take-Aways from Dynacorp
Changing the grouping structure can be disruptive
Dynacorp needs to weigh the advantages of a new structure vs.
the possibilities of using linking and alignment to strengthen
the existing system
If Dynacorp chooses a new structure, its success will also
depend on designing effective linking and alignment
mechanisms
36
Team Projects

Criteria for Organizational Analysis Projects
The initiative must already be underway, but not in existence
for too long a period of time (less than 1 year)
The initiative must involve a reorganization or change in the
structure (for ex., different reporting relationships or new
departments)
At least 6 individuals who are involved in the initiative must be
video format following health guidelines)
You can choose to do this individually or within a group
Groups must be @5 people
Examples of Organizational Analyses
ProMedica
Reorganization of purchasing function to centralize it
ProMedica
Introduction of a new department-acute health care delivery at
home
UT Dept. of Environmental Health
Combination of 2 departments to create a new group
Flower Hospital
Reorganization of the nursing structure/changing roles
Dimensions Credit Union
New C-suite level added with new reporting relationships

Organizational Analysis Projects
Discussion Questions
Introductions
Why are you interested in this topic?
What thoughts do each of you have about a specific
organizational change initiative that you could study?
What ideas do each of you have about an organization where
you could study this topic/initiative?
Class 4:
The Strategic Design Lens ObjectivesReview the basic concepts
and approaches of the strategic design perspective on
organizationsUnderstand strategic design concepts by applying

them to the HP case
*
Strategic Design LensSees organizations as social systems
designed to achieve strategic goals
*
Strategic Design
begins with …
3 Building Blocks of Strategic
DesignGroupingLinkingAlignment
*

Grouping
structuresFunctionalDivisionalProductMarketGeographic
Functional/Product Matrix Front/Back
boundariesIntegrationExamples includeLiaison rolesCross-
functional teamsIT systems
the incentives to do the tasks assignedExamples
includePerformance measurement systemsIT systemsTraining &
development programsFinancial, human, capital resources
HP Case Study

HP Case: Discussion QuestionsWhat are the strategies/strategic
direction of HP?What are the benefits of the front/back
grouping to HP?What are some pitfalls of the front/back
grouping?What linking mechanisms has HP put in place?What
linking mechanisms should HP put in place?What alignment of
resources has HP put in place?What resource alignments should
HP put in place?
Strategic Design LensThe organization is seen as a constructed
system to achieve certain goals.The Strategy of the
organizationThe 3 key design tools – grouping, linking,
alignment – are all needed.The role of the manager is a
strategist, an organizational architect.
*
Team Projects
of time (@ 1 year or less than 1 year)The initiative must involve
a reorganization or change in the structure (for ex., different

video format following health guidelines)You can choose to do
this individually or within a groupGroups must be @5 people
Final Paper: Grouping Structure Examples
Because the residents left, they were replaced by Nurse
practitioners. Previously, there was a resident available 24
hours to manage care for the stroke patients of behalf of the
Attending MD. Since the change, the residents were replaced by
2 nurse practitioners, who rotate days. These NPs only available
to care for the strokes patients 8a-5p. Since there is no one in
house overnight to care for the patients, the nurses must call the
Attending MD at home if they need anything that cannot wait
until morning. Because the Neuro/Stroke Attending MD cannot

be in house at all times, the ICU team may take over care for
critical stroke patients in the Medical/Neuro ICU while the
Hospitalist (Attending Medicine MD) may take over care for
noncritical stroke patients on the Neuro/Stroke MedSurg Unit.
*
Team Structure
Grouping: Original Alignment
MSP Analytics Manager
MSP Business Analysts (15)
Analysts (6)
RPO R&A Manager
RPO Technology & Analytics Director
President
*
Team Structure
Grouping: New Alignment
Business Intelligence Manager

BI Consultant
BI Consultant
BI Consultant
BI Analyst (4)
BI Analyst (4)
BI Analyst (4)
Reporting Analyst Lead
COO
Technology & Analytics Director
*
Organizational Structure
Before
After

Class 4:
The Strategic Design Lens ObjectivesReview the basic concepts
and approaches of the strategic design perspective on
organizationsUnderstand strategic design concepts by applying
them to the HP case
*
Strategic Design LensSees organizations as social systems
designed to achieve strategic goals
*

Strategic Design
begins with …
3 Building Blocks of Strategic
DesignGroupingLinkingAlignment
*
Grouping
structuresFunctionalDivisionalProductMarketGeographic
Functional/Product Matrix Front/Back
boundariesIntegrationExamples includeLiaison rolesCross-

functional teamsIT systems
the incentives to do the tasks assignedExamples
includePerformance measurement systemsIT systemsTraining &
development programsFinancial, human, capital resources
HP Case: Discussion QuestionsWhat are the strategies/strategic
direction of HP?What are the benefits of the front/back
grouping to HP?What are some pitfalls of the front/back
grouping?What linking mechanisms has HP put in place?What
linking mechanisms should HP put in place?What alignment of
resources has HP put in place?What resource alignments should
HP put in place?
Strategic Direction of HPBoost communication & collaboration
– sales and engineersSales growth and profitsBe market leader
with their productsFlexible in response to market Expand their
market areasShort term AND long term focusFast pace to
achieve their objectives Design products to meet customer
preferences & problemsLook at what competition is
doingStreamlining internal processesCross selling of products –

tie products together for customers
Grouping StructureOldProduct Division80 + divisions
NewFront/Back
Linking MechanismsExistingCross company teams-identifying
initiativesStrategy councilTeam to reduce costsNew IT
systemTeams focusing on the top customersLiaisons with
customers through Sales
ProposedLiaison(s)Between sales & engineersWithin product
lines- laterallyClearly defined procedures & new systems of
communicatingCOO role
Resource AlignmentsExistingMore resources toward R&D for
big hit productsSales compensation tied to performanceBonus
pay - changes in timingNew leadership roles Reporting systems
– financial IT systemOutsourcingLayoffs Staff
addedProposedMore staff – liaison roles & COOTraining For
new rolesFor new systems and
proceduresCompensation/bonuses for R&D Reduce $ spent on
meals Align sales & profits better
Strategic Design LensThe organization is seen as a constructed
system to achieve certain goals.The Strategy of the
organizationThe 3 key design tools – grouping, linking,

alignment – are all needed.The role of the manager is a
strategist, an organizational architect.
*
Team Projects
of time (less than 1 year)The initiative must involve a
reorganization or change in the structure (for ex., different
individually interviewed (via Zoom or Skype or other video
format)You can choose to do this individually or within a
groupGroups must be @5-6 people

Class 3 The Strategic Design Lens ObjectivesIntroduc

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