Chapter 15 : Designing Effective
OrganizationsJeff Schanze and Khanh Truong
Article Introduction
Avoiding the Guillotine by Gary Hamel
What is an Organization?
• Organization – System of consciously coordinated activities of two or more people
• Unity of Command Principle – Each employee should report to a single manager
• Lowe’s, Sysco, Sprint Nextel
Information on Organizational Charts
• Span of Control – The number of people reporting directly to a given manager
• Staff Personnel – Provide research, advice, and recommendations to line managers
• Line Managers – Have authority to make organizational decisions
• Organizational Chart – Boxes-and-lines illustration showing chain of formal authority and division of labor
Organizational Chart
Board of Directors
Chief ExecutiveOfficer
StrategicPlanningAdvisor
LegalCounsel
President
ExecutiveAdministrative
Director
ExecutiveMedicalDirector
Myth #1…Variety is Bad
• Industrial-era managers valued replication, predictability, and “conformance to requirements”
• Overemphasis on military-style discipline
• This thinking can cause missed opportunities
• Managers should celebrate variety
Myth #2…Experience Counts
• Traditional thoughts and ideas stunt growth
• New employees often bring innovative thoughts and ideas that can enhance a company
• Every committee, task force, project team, etc. should be heavily weighted with young people
Myth #3…Size Matters
• In the past CEOs often felt size mattered
• No correlation between size and profitability
• Porsche vs. Daimler Chrysler
• Mega mergers are not the way
Myth #4…Your Company is its Business Model
• Often a company’s fortunes decline as its initial business model runs out of steam
• Diversify and adapt
Myth #5…The Business Unit Rules
• Companies tend to put all of their eggs in one basket
• Spread talent and resources across the company
Myth #6…Resources Get Allocated
• Generally an idea must survive numerous skeptical executives as it works its way up the management hierarchy
• Focus on resource attraction and not resource allocation
• Fresh ideas should not be overlooked
Myth #7…Innovation is an Exception
• Companies say they innovate, in reality they do not
• Companies do not put as much effort into innovation as they do efficiency
Final Thought
“You can’t simply pull the old beliefs and values up by the roots; rather, you must carefully prune them so you create enough space for the seeds of tomorrow’s opportunities to take root.”
Gary Hamel
Questions?
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