Structure which is based on specific people is not durable and will be soon replaced. The most durable and workable structure is done according to the purpose of the organization and its strategy, which is to be created to carry out certain specific strategy. And if it is done correctly, then it will be topical as long as strategy will not be changed substantially.
What does it mean the appropriate structure of the strategy, or how it can support the implementation of the strategy; we’d like to focus on this topic in this article.
The three basic components of the strategy are as follows:
a) Strategic tasks or issues towards which the management’s attention should be especially directed for at least the next 2-3 years;
b) Strategic processes or processes in which the flow is of great importance for the organization;
c) Strategic competences or fields where the most important consideration is the aggregation of competence and expertise.
The structure is the most essential tool for the implementation of these three components of the strategy, without which its solution will be impossible or very difficult. The three components of this strategy are to create structures.
Among product or service quality development, sales promotion, expansion of assortment, price reductions on products, brand development and such tasks there are 4-5 most important ones for any organization in the next few years. The company must take care to ensure the solution of objectives in order to achieve the desirable goals. It is necessary that the structure clearly reflect these priorities. We provide the same amount of attention to the management of the daily activities of these tasks, as they are a priority for the organization.
The simplest way to ensure the strategic objectives of management with required attention is its distribution among the members of the top management team. The specific manager will be responsible for a specific task, who is subordinated to the first person with the main task to solve this problem. Also he/she will try to involve other leaders and the first person in this process if necessary, request the proper management resources, provide the mobilization and generation of necessary initiatives; in brief, he/she will take care of resolving this particular issue.
The difficulty is that often there are not enough people in the management team compared with strategic objectives; therefore, there is a requirement for their grouping. In such case a leader is responsible for more than one task. One should keep in mind while imposing more than one task on one person:
If one person is responsible for many tasks, the less will be the responsibility for each of them. He/she will select the issue that is easier or more pleasant for him/her, and starts to pay more attention and resources to it, even if it has less important significance for the organization compared with the other tasks.
That’s why it’s desirable not to group important tasks in one structure, not to trust one and the same person. Tasks which are included in triplet for their meanings should be distributed among responsible leaders so that one person is responsible for one task, while other less important tasks can be grouped for the rest leaders. Thus, their registry value will be automatically reduced compared to one by one allocated tasks.
Division of responsibility on strategic objectives among the members of upper management team will cause the regrouping of these tasks within the structure, respectively. This process occurs naturally and consistently, and less painfully for both management and the offices responsible for these functions.
There are such processes in every organization a continuous flow of which is critical for the success of this organization. Creation of new products or update of existing ones, quality control and development, customers’ attraction and subsequent processes of relationship with them, these are several examples of the processes that may have particular significance for the organization.
In order to ensure the proper flow of these processes within the structure, all functions necessary to fulfill that purpose should be performed. It means that there are relevant functions in the structure and people responsible for carrying out these functions that have required time, power and resources for this purpose. The structure should provide their control to ensure that the quality and scope of their duties are performed.
In order to bring the structure in conformity with the strategic processes, it is necessary to distinguish the most important processes, process them thoroughly, define all the functions that are needed for the flow of the process, and distribute them within the whole structure so that the necessary conditions, resources, and power will be provided, as well as sufficiently qualified and intensive control.
Often it is enough to omit even one key feature of the process in the structure, and the process becomes fragmented, confused and inconsistent, which makes the structure rather impeding than appropriate for a strategy.
It should be mentioned about the collegial structures. They are particularly important for the smooth flow of processes. Regular and proper operation of Board of Directors, Marketing Committee, Risk Committee, Development Council, Staff Council, etc. is a necessary condition for continuity of the strategic processes. The structure determines the content and the Rules of the work of these bodies, which would also affect the continuity and productivity of strategic processes.
Finally, the third major component of the strategy, with a particular impact on the structure, is strategic competence. If we want to gain exclusive competences in any product, in any field, in any activity, in this or that segment of customers with respect to any region within 2-3 years, the simplest way to do this is to form a sub-unit.
As soon as you set up such a structure, it significantly accelerates the accumulation of knowledge in this particular field, the more resources you give to this structure, the more rapid will be the rate of accumulation of expertise. If you create an export department, it will begin export specific information and knowledge accumulation, if will create the Russian export department, it will begin to collect the Russian market specifications and information, and if we create family sales department, it will start to collect competences about families’ behavior and needs, or if we create Department of Electronic products, it will gain knowledge about the modern technology-based products.
If we create a department in this or that direction, it will gain more knowledge and information than a small unit or just one position. In addition, there will be less dependence on the knowledge level of the people, i.e. the higher the status of the unit, the more rapidly it accumulates knowledge and the more institutional nature it has got.
In short, the structural arrangement directly determines what our organization will know in 2-3 years, in what directions it will have a special expertise and information. We cannot be equally competent in everything like we cannot create all services. Thus, we have to choose the strategic direction in which the accumulation of information and expertise, and their respective structural decision-making is particularly important for future success.
If the organizational structure does not ensure the daily life of the management with enough attention to the strategic priorities, if it does not assist in continuous flow of the strategic process, if it does not collect the knowledge and information of special importance in the organization, then it does not support the achievement of the goals, but hinders the process, directs resources to somewhere other directions and thus makes the organization less competitive and commercially viable.