RESEARCH PAPER ON STRUCTURE FOLLOWS STRATEGY
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RESEARCH PAPER ON STRUCTURE FOLLOWS STRATEGY
INTRODUCTION
Structure follows strategy is a business idea that asserts that an organization’s divisions, departments, teams, procedures, and technology are all structured to help the firm achieve its plan. This may appear clear, but in practice, the reverse frequently occurs.
For example, Dangote Cement Plc’s technology department may build technology implementation strategies simply because it is what technology departments do.
Similarly, at the product level, if a corporation has a cement manufacturing department, that department will tend to develop strategies for better or more profitable cements, regardless of whether this corresponds with corporate strategy.
The goal of structure is to organise your resources in such a way that you can execute your strategy. So, before going on the quest to decide your structure, ensure that you have a clear direction. To create an effective organisation, you must be able to describe what the structure needs to enable.
If you intend to grow quickly or expand internationally, your structure must be scalable and capable of dealing with multiple time zones. If you want to introduce innovation into a traditional organisation, something has to change in the design to allow innovation to thrive, or it will be strangled from the start by bureaucracy.
When you consider how many firms use identical variations of the classic line structure despite having different goals and objectives, you might conclude that structures are independent of strategy.
It is easier to use the standard line diagram, but in the world of structural design, one size does not fit all. It pays huge dividends to design a structure that is specifically tailored to your organisation.
However, the notion “structure follows strategy” has been critiqued as overly simplistic. Indeed, it is overly deterministic. In actuality, enterprises have some degree of control about the organisational structure they apply, and the plan does not compel the Dangote group of companies to use a specific structure.
Furthermore, a company’s resource distribution, objectives, and decision-making processes are all influenced by its organisational structure. As a result, the organisational structure influences the strategy process, and “strategy follows structure” is sometimes true.
In a contingency viewpoint, Dangote Group must match their strategies with the external environment, such as industry requirements, and, as previously noted, variances in the external environment (e.g., different regions) may necessitate specific organisational structures.
Thus, some recent literature contends that there is no unidirectional influence of strategy on structure or vice versa, but rather that corporate strategy and corporate structure must be aligned with existing degrees of freedom, and both must conform to the external environment.
Structure must be aligned with values and espoused culture.
Your structural design will be shaped by your strategic, value, and cultural aims. If your value statements ever become more than just aspirational words on a page, and you wish to translate your professed culture into concrete action, this will have far-reaching ramifications for your structural design work.
If your declared value is ‘customer centric’ but your organisational design is entirely internal and lacks an external radar, you are introducing a fundamental clash of values into your structure, resulting in confusion.
If you declare that your personnel is your most valuable asset yet your company is driven by compliance and control, you will end up with disgruntled employees and high turnover.
Effective frameworks provide clarity, allowing everyone to rapidly understand how they should act and react to others both inside and outside. They are also congruent with the organization’s goals and objectives, ensuring that everything works in harmony. So, how should your structure be bent to genuinely connect with your ideals and evolving culture?
Size matters.
Small businesses with up to 12 employees typically operate as a family cluster. When they reach the ages of 24 to 30, they begin to function as an extended family, with everyone knowing everyone else. The major changes begin when the group size exceeds our ability to function as a family.
The more people there are and the more intricate the interconnections, the more well defined your structure must be. By the time you reach 80 people, the family atmosphere has been replaced by numerous families, a tribe, or one of the organising principles outlined in the following section.
Some businesses try to put heavy structures on tiny businesses that are still on the ‘family size’ end of the spectrum, which frequently results in problems with superfluous bureaucracy, slowing down the organisation rather than facilitating progress. It’s similar like trying on your father’s suit when you were a child. There’s no reason to complicate structures too quickly.
This essay is intended for organisations with 80 to 10,000 employees. Control concerns resurface in much larger organisations, those with 50,000 or more employees.
Some seek to address the issue by instituting a strict command and control culture focused on quality assurance, health and safety, and budget control. Others allow divisional structures to adjust to specific local needs while keeping reporting structures constant and linked.
The Organisational Principle and Structural Archetypes
Every structure has an underlying organising principle. Yuval Harari’s great book ‘Sapiens: A Brief History of Humankind’ helped us comprehend that as a species, we are constantly looking for an organising principle around which to cluster.
Our climb to supremacy on this fragile planet is largely due to our capacity to rally vast numbers of people around an appealing notion, such as membership in a tribe, area, political party, or sports club.
It provides humans an enormous advantage over other animals. Millions of individuals follow the Dongote Group of Companies, despite the fact that the majority do not work for the company.
Organising concepts are powerful catalysts, and they are also active in our professional lives. So, the fourth principle of structural design is to align your structure’s organising principle with the needs of your strategy.
Structure, Strategy, and Organisation
Structure is the design of the organisation through which strategy is implemented. Changes in an organization’s strategy might cause new administrative issues, necessitating the creation of a new structure to ensure the successful implementation of the new plan.
The structural architecture of an organisation outlines its roles, duties, and lines of reporting, and it can have a significant impact on the sources of its competitive advantage.
Thus, failing to properly modify structures can completely weaken implementation. Chandler (1962) demonstrated how organisations evolved over time by identifying four consecutive stages:
Acquisition of resources, such as employees and raw materials, and the establishment of marketing and distribution networks
Establishing functional structures to boost efficiency.
Adoption of growth and diversification strategy: expansion into new markets and goods to overcome limitations of the home market.
The development of the then-revolutionary diversionalized structure for managing massive companies.
It is worth noting that Chandler felt that strategy is provided, therefore even before developing a structure, a plan is in the back of one’s mind. That is why, after developing functional structures, strategists embrace the already established -existing- strategy (Mintzberg, 1987).
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