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
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. Organizational structure
• Organizational structure describes:
Who is responsible for what
Patterns of communication and knowledge
exchange
Skills required to move up the organisation
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
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. 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. 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. Nature of organizational structures
1. Formal structures
Functional
Multidivisional
Matrix
Multinational
2. Temporary structures
Team
Projects
3. Informal structures
Social networks
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. 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. 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. 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. 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. The peripheral specialist
Serves as an expert
He is not well
socialized and not
tightly integrated in the
informal network
Often new hires
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.
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. How to control deployment?
RatiosRules
Formal
control
PoliticalRoutines
Informal
control
Output
(results)
Input
(use of resources)
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. 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. 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
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. 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. 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
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
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
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
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. 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. 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. 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. 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. Next week
• Final session
• Quizz (Sessions 7-9)
• JC Decaux Case Study in team
