TOPIC 5

Strategy, organizational design,

and effectiveness
What Is Organizational Strategy?
• At its most basic, an organizational strategy is a plan that specifies
how your business will allocate resources (e.g., money, labor, and
inventory) to support infrastructure, production, marketing, inventory,
and other business activities.
When you sit down to create your
organizational strategy, you should first divide
it into three distinct categories:
• Corporate level strategy
• Business level strategy
• Functional level strategy
 Corporate Level Strategy
• Corporate level strategy is the main purpose of your business — it’s
the destination toward which your business is moving.
• Common corporate level strategies include:
• Concentration
• Diversification
• No Change
• Profit
• Investigation
• Turnaround
• Liquidation
• Most corporate level strategies will be broad in scope, complex, and geared toward the overarching
goals of your business.
 Business Level Strategy

• Business level strategy is the bridge between corporate level strategy

and much of the “boots-on-the-ground” activity that occurs in
functional level strategy. Because of that, business level strategy is
more focused than the corporate level strategy that drives it.
• So, for example, if your corporate level strategy is diversification, your
business level strategies might look something like this:

• Increase marketing budget

• Rebrand
• Investigate new markets
• Broaden exposure
• Those more specific goals will then guide you in setting your functional
level strategies.
Functional Level Strategy
• Functional level strategies are the specific actions and benchmarks you
assign to departments and individuals that move your business toward
the goals created by your corporate level strategy. They are a direct
offshoot of your business level strategies.

• Functional level strategies, by nature, will be very detailed. So if one of

your business level strategies is to rebrand your product, a functional
level strategy might be for the marketing department to investigate
which color your product should be so that it appeals to your target
audience.
• Those three strategies together — functional, business,
and corporate — make up the very broad, very general
organizational strategy that every company needs to be
successful.
Why Does Your Business Need An
Organizational Strategy?
• 1) Sets Direction And Priorities
• an organizational strategy gives your business direction. Without that
direction, your business may be failing in the wind.
• An organizational strategy also gives your business priorities. It
defines success and shows you what activities you should put first
(and second, and third) in order to move your business toward that
goal.
Why Does Your Business Need An
Organizational Strategy?
• 2) Aligns Teams And Departments In A Common Goal
Getting all your departments and teams pulling in the same direction is
hard enough. Without an organizational strategy, it’s nearly impossible.
When you set your overarching strategy — even if it’s something fairly
vague, like increase profits — you give all your employees a common
goal to get behind. That creates alignment within departments
(horizontally) and throughout your organization (vertically).
Why Does Your Business Need An
Organizational Strategy?
3) Clarifies And Simplifies Decision Making
Decisions about your business can be some of the most difficult you’ll
ever have to make. But with an organizational strategy in place, you can
reduce the number of decisions you have to face and clarify which ones
make the most sense based on your goals
4) Allows Your Business To Adapt

• If you are driving to work in the morning and you encounter a detour,
do you turn around and go home? No. You follow the detour (or, if
you know the area, you find a better way around the construction)
until you arrive at your destination.
• Your organizational strategy is like that destination (getting to work). If
problems arise along the way, you don’t give up completely; you
adapt in order to continue moving toward the ultimate goal
Key Features Of An Organizational Strategy

1) Realistic

Your organizational strategy should, first and foremost, be realistic. If

your annual profit is consistently $100,000, then setting the goal to
make $1,000,000 in profit next year might be a bit unrealistic.
Key Features Of An Organizational Strategy

2) Measurable

All organizational strategies should be measurable. Saying that you

want to get better (a qualitative goal) is fine, but you need to come up
with some way to measure how you’re getting better.
Key Features Of An Organizational Strategy
3) Specific

When setting your organizational strategy, make it as specific as

possible. Instead of saying, “We want to be the best in the industry,”
say, “We want to hold 51-percent market share amongst all our
direct competitors.” That’s a specific, measurable goal you can work
toward
Key Features Of An Organizational Strategy
4) Limited

• Your organizational strategy shouldn’t be open-ended. It needs a

deadline. Most businesses give themselves three to five years (again,
be specific) to reach their organizational goals. This deadline dictates
what you do and how quickly you do it.
The Best Way To Create An Organizational
Strategy
• Sling organizational strategy features
• One of the best ways to start creating an organizational strategy is to
examine your current procedures. Scheduling, for example, is
notoriously complicated. Preparing your business for the changes to
come means streamlining the process so your team can better adapt
once you set your organizational strategies.
What is meant by organizational design?
• Organisational design is the process of aligning the structure of an
organisation with its objectives, with the ultimate aim of improving
efficiency and effectiveness. Work can be triggered by the need to
improve service delivery or specific business processes, or as a result
of a new mandate.
5 Essentials to Effective Organization Design
1. Start with strategy
• Because many companies believe their strategy is solid and all that’s
required is the “right organization” to make it come to life, everyone
wants to begin by drawing boxes and lines. But the process needs to
start with a deep review of strategy and its implications.
2. Define the capabilities required to win
• Like the coaches of any winning sports franchise, business leaders
must consciously build or buy the capabilities required to successfully
execute the business strategy.
• These capabilities should include both people and processes because
the easier you make it for your employees to execute, the more
successful you will be.
3.Involve those who will be impacted
• Many executives see organization design choices solely as a task for
senior leaders.
• Time and time again, we have found that enlarging the circle of
involvement yields better designs and better execution.
Align metrics & rewards
• Once the new organization design is complete, it’s critically important
to align the business metrics and reward systems to be congruent
with the business strategy and the organization design.
Have a clear implementation program
• The design you select will require new ways of working. Structures
with boxes and lines look simple on paper, but our complex world
requires interaction that goes beyond reporting relationships.
• Often, companies pay a lot of attention to communicating a new
structure rather than helping employees understand how to
effectively operate within it.
What are the 4 types of organizational
design?
• The four types of organizational structures are functional, divisional,
flatarchy, and matrix structures.