Having gone through a number of organizational redesigns, I was particularly interested in this week’s readings. Especially interesting to me was Applegate (1995) and the impact of the information age on organizational structures. As the article was written some 17 years ago, before some of the technology that connects and informs us on daily basis (Twitter, Facebook to name but a two) were introduced, I went to the USC libraries to look for some more recent academic articles to see what impact, if any, this access to information sharing had had on organizations. I didn’t find exactly what I was looking for—note to all of us about a potential research direction—but did find a fascinating article about organizational change, written by someone who had led the process in a business, and a business that happens to be a competitor to my business.
In the article, “Lessons Learned from a Global Organizational Redesign (Rice & Nash, 2011), John Rice and Maureen Nash, offered an outline and assessment of a structural change they led at Tyco Flow Control in 2008. Theirs was a retrospective of the process they used and an evaluation of the factors that they believe played a role in its success. This article, from practitioners who’d been in “the trenches” brought into focus many of the concepts from our reading over the last week.
The decision to redesign their organization was driven by market factors (Rice & Nash, 2011). A decision had been made at the executive level to change the structure from aligning around regions to aligning around industries, across regions (Rice & Nash, 2011). Goold and Campbell (2002) list “The Market Advantage” as a key question to ask in looking at changing an organization’s structure.
At Tyco Flow Control, the president realized that they needed to focus on key markets and customer needs in a fast-changing environment to achieve long term global success (Rice & Nash, 2011).
With the end in mind, the team set about creating a strategy to implement the organizational change. They assembled cross-functional teams, made the redesign part of the team’s job responsibilities, rather than an add-on (Rice & Nash, 2011). Once the initial design has been formulated, they broadened their cross-functional team to include a wider group to help assess and determine the final pieces of the organization (Rice & Nash, 2011).
The structure that resulted drew on many of the ideas conveyed by Nohria (1991). The final structure at Tyco Flow Control was a self-designed network structure. Nohria wrote that “A network structure involves blurring the boundaries between the organization and its environment…” (Nohria, 1991, p.8) is the structure that Tyco Flow Control created from its planned organizational design effort.
References
Nash, M., & Rice, J. (2011). Lessons learned from a global reorganization redesign. People & Strategy, 34(4). 2011, pp. 56-68.
Nohria, N. (1995). "Note on Organizational Structure." Harvard Business School.
Applegate, L (1995). "Managing in an Information Age." Harvard Business School.
Gould,M. & Campbell, A. (2002) "Do You Have a Well Designed Organization?" Harvard Business Review.
Cynthia, I think access to information technology has given organizations more structural flexibility. One way, as you mention here, is through networked organizations. As you said, this type blurs the boundaries between the environment and the organization, allowing for greater "surface area," which we talked about last week. Just like in Tyco Flow Control (tongue twister?), there is an emphasis on teams, knowledge workers, and informal structures.
ReplyDeleteAnother structure that has been possible due to information technology is the virtual organization, and there has been much research in this area. Daft's (2007) Tivo example clearly shows the structure of a virtual organization.
You write that Tyco wanted to configure itself around customer needs. Do you think aspects of horizontal structure may be needed here (Daft, 2007, p. 113)?
Yes, I found the Daft (2007) descriptions particularly interesting. While there would be some benefit to aspects of a horizontal structure, where the company might organize around a process (Daft, 2007, p. 113). However, in a company like Tyco Flow Control, where there are limited varieties of producs, a Hybrid Organization might be more benficial. Employees/teams could specialize around an application of a product in an industry or region and share functional resources.
DeleteThis is pretty interesting considering the interview I had with a market manager at ThermoFisher. I am going to have to read that article and get back to him! Within his organization there is a lot of resistance to changing from their divisional structure, but it is also inhibiting their growth. Being in a similar industry as Tyco, do you feel that the network structure is best for this type of business?
ReplyDeleteResistance to organizational change must be pretty universal...I think it must be fear of the unknown or change in general. You have to wonder if that inability to adapt and grow personally becomes institutional, thereby inhibiting business growth.
DeleteAs far as "best", not sure I know that answer. It's hard to imagine that any large global business that serves multiple industries should be anything but hybrid (Daft, 2007). You need functional experts, regional structure to make local decisions, product line structure around particular industries and the ability to accommodate virtual cells.
Probably more of a question for a finance-related class, but did the entry go into detail about how it made the redesign part of employees' responsibilities? I wonder how much give an organization has during a transition like this and how much the "lost" productivity it can absorb as employees are taken away from their day-to-day "money-making" tasks and added to project teams.
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