Post on 12-Jan-2016
Competing on the Edge: Redesigning organizations through patching
The case of Microsoft Multimedia
The changing role of executives in today’s organizations
Patching: Re-stitching business portfolios in dynamic markets
Changing roles of executives?
Senior executives: Focus on organizational context rather than strategic
contentProtect and reinforce organizational norms and
values Middle level executives
Coaching, supporting, and developing business unitsDelegate responsibility
First-line ExecutivesDeveloping/motivating teams and building unit’s
capabilitiesDeveloping unit level strategies
Patching: Restitching business portfolios in dynamic markets
Patching is the organizational process by which corporate executives routinely re-map business units to take advantage of the changing markets.
Patching can take the form of adding, splitting, transferring, exiting, or combining modules of businesses.
Patching focuses on the organizational processes more than strategic market positioning
Reorganization Versus Patching
Regularly track fine-grained metrics on modular businesses
Fine grained metrics only for infrequent reorganization
Metrics
Roughly right realignments over time
Optimal restructuring at a specific point in time
Precision
Get business focus and size right
Get business focus right
Driver of change
Change process is routine and follows patching moves
Every change is uniqueFormalization
OngoingRareFrequency
Mostly small, and a few are large
MajorScale of change
Proactive weaponDefensive reactionRole of change
Company wide parityNot relevantCompensation
Reorganization Patching
Is it time to repatch?
Are your businesses ignoring significant opportunities? Or, are they converging onto the same new market opportunities?
Has growth stalled in your current patching arrangement? (average selling price, market share, gross margin, or the rate of new customer acquisition are falling)
Are you imposing one management structure on your businesses that evolve at different rates?
Are your customers segmenting your products or services differently than your organization is currently structured?
Are better performing competitors patched differently?
What is your organizational risk exposure?
Pressure for performance
Pressure for performance
Rewards forentrepreneurialrisk taking
Rewards forentrepreneurialrisk taking
Transactioncomplexity andvelocity
Transactioncomplexity andvelocity
Rate of expansion
Rate of expansion
Inexperience ofkey employees
Inexperience ofkey employees
Executiveresistance forbad news
Executiveresistance forbad news
Level of internalcompetition
Level of internalcompetition
Gaps in diagnosticperformancemeasurements
Gaps in diagnosticperformancemeasurements
Degree of decentralizeddecision making
Degree of decentralizeddecision making
+ + =
+ + =
Growth
Culture
Information Management
Scale: 1 through 5
+ + =
Score
The risk exposure score: It is used to gauge a company’s likelihood of being surprised by organizational breakdowns that can threaten its performance
9-20: Too much safety?The firm can be safe from unexpected errors or events but the management should question whether or not they are risk averse.
21-34: The caution zoneThe management should be alert for high scores in any two of the three risk dimensions.
35-45: The danger zoneIt is now time to develop strategies for managing risk through organizational processes.
Source: “How risky is your company?” by Robert Simons. Harvard Business Review, May-June 1999, pp:.85-94.
The levers of risk management
Belief systems: Have senior managers communicated the core values and ideals of the business in a way that people understand and embrace?
Managerial discipline: Have the middle managers clearly set the standards and provide discipline?
Diagnostic control systems: Are diagnostic measures adequate at monitoring critical performance variables?
Interactive control systems: Are control systems designed to stimulate learning?