Professional Documents
Culture Documents
PROJECT
Section B - Group 9
Organizational Design
When a number of people, having common goals in their mind, come together to achieve it,
using the available resources efficiently, the structure thus formed is called an organization.
Organizations are thus, social entities, comprising of people having a common motive and a
plan to achieve it. But what is that force, which has led to such a large bank like Lehmann
Brothers to collapse, and which has led to such a widespread expansion of a once start-up,
Amazon. This driving force behind the success or failure of an organization is called the
organizational design.
At the core of any organization is effectiveness and efficiency. Effectiveness is how well, an
organization is able to achieve its pre-determined goals and efficiency means, how smoothly,
it can achieve them, using the available resources at hand in a well-planned and structured way.
The Organizational Design also tells us about how the information flows in an organization
and what is the structure and relationship between the different levels of employees. The design
of the organization and its culture plays a very important role in defining the course of action
for the organization and also explains and gives an insight into the relationships between the
employees and the hierarchical levels within the organization.
Structure of McKinsey
All the organizations follow one of the following structures
Types of organizational structures
· Hierarchical organization structure: It’s the most common structure in which the
command flows from top to bottom and each employee has a supervisor
· Functional organization structure: Almost similar to a hierarchical structure. Employees
are organized according to their skills and functions in the organization.
· Horizontal or flat organization structure: In this structure there are a few levels between
the upper management and the staff level. Usually, start-ups follow this structure
· Divisional org structures (market-based, product-based, geographic): In this the
company’s divisions have control over their own resources and have autonomy to utilize
them. Each division can have its own operations, marketing, IT team etc. This is followed
by companies with various divisions.
· Matrix org structure: It looks like a grid and it shows cross functional teams which come
together for some projects.
· Team-based org structure: The organization is structured as a team. It incorporates
Scrum teams and are more focussed on problem solving and employees have more
autonomy.
Initially, McKinsey & Company was organized as a partnership but in 1956 it got legally
restructured as a private company with shares owned by its partners. Though it is a private
company, it acts as a partnership and its employees are called partners. There are different
levels in the organization namely, Business Analyst, Associate, Junior Associate, Associate,
Engagement manager, Associate principle, Partner, Senior Partner.
The company follows a flat hierarchy structure and every member is allotted a mentor.
McKinsey's Managing Director is elected by a vote of senior directors and serves up to three,
three-year terms or until reaching the mandatory retirement age of 60. A series of committees
manages the firm by a series of committees which have their own area of responsibility and
functions.
McKinsey also has a decentralized structure in which different offices operate similarly, but
independently. In McKinsey, individual consultants are given autonomy and independence to
carry out their work.
Organizational chart:
• Both managers are considered of equal importance and both are intertwined playing
essential roles in leading teams.
• Helix can help large organizations such as McKinsey to develop an agile and lean
organization structure.
• Operating model cannot be solved by structure alone. For successful implementation
of Helix, new processed and varied mindsets have to be embedded to get rid of
obstacles and overpower skepticism.
Porter’s Strategy
Introduced by Michael Porter, the model describes how companies can have a competitive
advantage by adopting the right strategy. The two broad divisions within this are the
Differentiation and the Low-Cost Leadership Strategies. Mckinsey, being a global brand,
having the advantage of high recognition along with a great brand value, has over the time
being following the differentiation strategy. It was very easy for Mckinsey to adopt the
competitive advantages over its competitors, due to the lack of competition in the market. But,
with the market competition becoming more and more fierce and intense and with the coming
up of new, equally good consulting firms, Mckinsey had to restructure its strategic design.
The company has now resorted to a mix of differentiation and cost leadership strategies to
handle the constantly increasing pressure from the growing competition. Focusing on the
customer base expansion and the sales growth, the company now focuses on the intensive
growth strategy based on the Porter’s model. The intensive growth strategy adopted by
Mckinsey includes market penetration, product development, diversification and market
development.
Cost Leadership Strategy at Mckinsey- This strategy focuses on gaining an upper hand over
competitors by lowering the cost. Mckinsey has been using the cost leadership strategy in
various consumer markets. By adopting this strategy, Mckinsey focuses on how to preserve the
market leadership position by adopting efficient value chain management.
Differentiation- To showcase its USP, Mckinsey has been using the differentiation strategy to
expand its customer base by emphasizing the unique products it has to offer. This strategy helps
it to create a differentiating factor in the minds of its potential customer base and helps its
products to stand out. High investment in marketing, advertisements is made just to
differentiate Mckinsey from its competitors.