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First Concepts Consultants

Advisors on Leadership. Leadership Development, Cultural Change, Strategy and Creative Problem Solving

Strategy Follows Structure, Structure Supports Strategy

Strategy and structure are married to each other. If you change one you have to change the other.

For too long, structure has been viewed as something separate from strategy. Revising structures are often seen as ways to improve efficiency, promote teamwork, create synergy or reduce cost. Yes, restructuring can do all that and more. What has been less obvious is that structure and strategy are dependent on each other. You can create the most efficient, team oriented, synergistic structure possible and still end up in the same place you are or worse.

Strategy and Structure

Strategy follows structure, structure supports strategy

The Connection between Strategy and Structure

Structure is not simply an organization chart. Structure is all the people, positions, procedures, processes, culture, technology and related elements that comprise the organization. It defines how all the pieces, parts and processes work together (or don’t in some cases). This structure must be totally integrated with strategy for the organization to achieve its mission and goals. Structure supports strategy.

If an organization changes its strategy, it must change its structure to support the new strategy. When it doesn’t, the structure acts like a bungee cord and pulls the organization back to its old strategy. Strategy follows structure. What the organization does defines the strategy. Changing strategy means changing what everyone in the organization does.

When an organization changes its structure and not its strategy, the strategy will change to fit the new structure. Strategy follows structure. Suddenly management realizes the organization’s strategy has shifted in an undesirable way. It appears to have done it on its own. In reality, an organization’s structure is a powerful force. You can’t direct it to do something for any length of time unless the structure is capable of supporting that strategy.

A Science Fiction and Real World Example

Let’s look at an imaginary example using the human body. Suppose science figured out how to create a living tissue arm to replace one’s existing arm that could perform 300% better in strength, responsiveness and dexterity. The strategy here is to restructure the body with this super arm so it can do more. The scientists successfully replace an existing arm with this new super arm.

What will happen? The rest of the body remains as it was before. So the heart, circulation system, nervous system and brain are still structured to support a regular arm. This new arm requires more and faster blood flow, faster neuron responses in the brain and so on to support its functions. Over time, the super arm will evolve back into a regular arm because the rest of the body cannot support its enhanced capabilities. For this science fiction example to work, scientist would need to restructure the entire human body, not just one part of it.

What happens when you restructure sales channels resulting in large sales increases but nothing is changed in order processing, customer support, engineering or manufacturing? You end up with a lot of unhappy customers because the company can’t deliver on its promise. How many times have we seen something like this happen?

Or what happens when you add a new offering that goes to a new target customer?  Maybe a company has a sales force that sells to small businesses and lower management in larger organizations. They add a new offering that is targeted at top executives. The existing sales force / sales channels cannot effectively sell to that new target. This has happened just a few too many times.

And, of course, what happens when a firm makes a major push to upgrade its quality and service without improving everything in the organization that supports products and service? Disaster. Plain and simple.

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Don Shapiro Speaks – website about his speeches, workshops and training

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Strategy is the Structure

The sum total of how an organization goes about its work is its strategy. Structure and strategy are married to each other. When a company makes major changes, it must carefully think out every aspect of the structure required to support the strategy. That is the only way to implement lasting improvements. Every part of an organization, every person working for that organization needs to be focused on supporting the vision and direction. How everything is done and everything operates needs to be integrated so all the effort and resources support the strategy.

It takes the right structure for a strategy to succeed. Management that is solely focused on results can have a tendency to direct everyone on what they need to do without paying attention to the current way the organization works. While people may carry out these actions individually, it is only when their daily way of working is integrated to support strategy that the organization’s direction is sustainable over time.

Implementing Change As Important As Strategy Itself

During the last 27 years, we’ve worked with organizations in over 30  industries to help them find more ways to increase sales, growth rates and market share. Improving existing strategies and creating new strategies that can spur exceptional growth reflect our firms main mission. But, over the years, we began to notice that some clients were not successful in implementing new strategies. That is what led us to look deeper into the cause behind this.

Stucture

Does your company’s DNA structure support your strategy?

Top management can’t just send out a proclamation about a new strategy, direction and vision and expect everyone to follow it. To implement such a strategic shift requires a complete change within the organization itself. The organization’s DNA has to be rebuilt or its existing DNA structure will cause the new strategy to fail and revert back to the old strategy. And that will happen without top management’s involvement.

Leadership and people issues turn out to be much more important than we may have realized. On the surface, everyone talks about the importance of people and leadership but too often, management puts this on the back burner when the heats on to deliver quarterly results or meet the guidance. Structure is strategy.

That’s why we realized our focus on increasing our client’s revenue had to be balanced by an equal focus on implementing change. We didn’t want to leave clients with reports that weren’t implemented or worse implemented through directives that ultimately failed. So many years ago we became project managers for our client’s implementation efforts to insure that their new strategies designed to increase revenue actually rang the cash register. You can’t improve strategy, increase revenue, even enhance the performance of a sales force without addressing the structural, people, cultural, communication, measurement and leadership aspects of the organization or at least that part of the organization you are changing.

Strategy and structure are married to each other. A decision to change one requires an all out effort to change the other. But that structural change must be well thought out and based on a thorough cause and effect analysis. You don’t just change a structure to change it. You have to make sure the changes will support that strategy. At the same time, you don’t just implement a better leadership and engagement approach in a company or alter the organizational chart without evaluating how that is going to effect the firms ability to carry out its current strategies.

Don Shapiro Speaks – website about his speeches, workshops and training

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how this strategy and structure discussion relates to your organization.

Further Reading

Raise the Customer’s Perceptions of Value to Close More Sales

Closing the sale is about raising the customer’s perceptions of value as high as possible. This article summarizes 28 years of First Concept’s research about how customer’s figure out their perceptions of value and how this can be applied to get them to say yes more often.

Customer  Value…The Ultimate Path To The Best Strategies, Products and Services

Why do the same strategies succeed in one business and fail in another? Why do the strategies and success stories from best selling books work sometimes and fail other times? Is there a more universal principle for creating strategies that work all the time? This article will show you what that is and why it works.

Build Trust to Boost Employee Retention and Customer Service

Studies show a strong connection between employee trust, employee retention, customer satisfaction, sales and profits. Based on First Concepts primary research, it appears that effective leadership is a key reason employees trust where they work. What are the leadership characteristics that build trust? This article explores these relationships and the role of a leader’s character in building the type of trust that produces better results.

Find The Stealth Customer Value To Increase Sales (And Your Prices)

Hidden customer value exists inside every customer and company selling to those customers that could increase sales and justify higher prices. This article clarifies what customer value is, why it’s so important and includes a checklist of ideas and questions for uncovering stealth customer value.

Closing The Sale: Salespeople’s Choices Are The Key

Closing the sale is more about the choices salespeople make then the techniques they use. This article explores what affects a prospect and customers decision to buy and what can help salespeople to close more sales. The concepts discussed can also be applied to all elements of marketing.

We Need People Who Can Lead Regardless Of Their Title

Leadership isn’t about ones title or authority. It’s about who you are inside. Everyone in an organization needs to lead some of the time and those in positions of authority need to lead all of the time. Explores some deeper truths about leadership and leadership development that have a major impact on results.

It’s All About Thinking

Every result can be traced back to a decision that was based on a thought. Every strategy starts with the application or misapplication of thinking. Every decision about how to implement strategy and structure (or fail to change the structure when the strategy was changed) grew out of the thinking processes used by management. Don Shapiro has been studying and applying thinking processes since the age of 15. Every organization can improve its results, its strategy, its structure if it applies the right combination of thinking processes.

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43 Responses to “Strategy Follows Structure, Structure Supports Strategy”

  1. Jala says:

    When might a firm finds that its aims and objectives are in conflict with stakeholders and critically analyze and evaluate how this might be resolved.Thank you

  2. Don Shapiro says:

    You’ve asked a great question. Without over simplifying my answer, the starting point usually involves listening carefully to stakeholders on a regular basis so you know what’s on their mind, how they see things and what they think the firm’s aims and objectives are. If you ask a lot of stakeholders what their firms aims and objectives are and you get back answers which are different then the firm’s real aims and objectives as set by top management and the board, then you have a problem. If listening to stakeholders is a problem, then that needs to be resolved and normally indicates a leadership effectiveness issue.

    That doesn’t tell you what the problem is however. When you say “conflict”, that implies some type of disagreement by stakeholders as to what the aim and objectives should be. That is different than the stakeholders not understanding what the aim and objectives are or misinterpreting them. The later is a communication and education issue for the firm to get everyone on the same page.

    The former where stakeholders actually disagree with what the firm’s aims and objectives should be is a very different matter entirely. This calls for some type of planning and discussion process among everyone to work through the issues and move toward consensus. That requires specialized facilitation by an outside party who does not work for the firm. You need an objective outsider who can guide the discussions and individual efforts, help resolve the conflicts, help everyone look at the deeper issues that underlie the differences and move the group toward a common understanding that will lead to decisions everyone can support.

    I would be remiss if I did not mention the role of leadership in this. Often times when there is a conflict about the aims and objectives of a firm, it indicates that there could be leadership issues as well. If top management is not effective in their leadership roles, these types of conflicts can easily develop. When an evaluation is done of a firm like this by an outside firm (recommended for objectivity and expertise in these areas), leadership effectiveness is always included in the evaluation. It’s not enough just to resolve the conflict. You have to identify what caused the conflict in the first place otherwise it will occur again.

    If you work for such a firm or you head such a firm, you should reach out to me using the contact form from the navigation bar so we can discuss this further. We have processes for addressing all the issues discussed here.

  3. Haresh Kumar says:

    which comes first strategy/structure,if strategy then why? and if structure then why?

  4. Don Shapiro says:

    Great question Haresh. Strategy always comes first. What is the purpose of a structure? Why does the structure exist? What result is the structure intended to produce? Creating a structure just to create a structure serves no purpose and requires the expenditure of money without any thought about a return.

    Strategy defines what customers and markets an organization serves, what they are offering those markets, what makes them different and better than their competition, how they will offer this at an attractive price that they can make a profit at and much more. You have to know what you are offering, who you are offering it to and why you are offering it to them before you can create a supporting structure to carry out these strategies.

    Once you have created that structure, you then have to closely monitor both the strategy and the structure over time. If you make any adjustments in the strategy, you need to adjust the structure to support those changes. If you discover that something needs to be improved in the structure, you need to carefully consider whether those improvements will help or hinder the firms ability to execute its strategy.

    Many firms work on improving their people, systems, organization, culture and more. This is a good thing because they want to always be the best at what they do and that means continuous improvement. Too often, this is done without considering its affect on strategy and that’s where some firms get into trouble. Continuous improvement in how well things are done has to go hand in hand with continuous improvement in strategy.

  5. Andy says:

    How can they (Strategy & Structure) mismatched when both both depend on each other? Thank you.

    • Don Shapiro says:

      Excellent question Andy. While they are connected and dependent on each other, they can be separately and independently controlled. Top management can decide to change strategy and also decide to not make any changes to structure. Or they could revamp structure but not change strategy. I have seen both occur during my experience as a management consultant.

      When you change one, it will change the other because of the dependent relationship. That’s where companies get into trouble. They change one and don’t realize how it will alter the other. Then the other one changes and in a way that hurts them.

      Here’s a simple, classic and all too common example. Suppose a company has a strategy to deliver superior customer service. Every part of their firm has been developed to do this consistently. This strategy has resulted in their having an image of offering great service and support. Then profit margins get squeezed due to competitors actions and the company responds by laying off employees and shrinking some departments. They think they can do this without it affecting their service image. Usually, they are wrong because their service slips (the structure side) due to the change in strategy (making cost reduction a higher priority than service).

      Hope this helps.

      Don

      • percy says:

        what if a strategy implemented does not correspond with the organisational structure?

        • Don Shapiro says:

          Hi Percy,

          I will be happy to answer your question though I believe it has been answered through all my previous replies. Have you read the entire comment thread and post? If a strategy is not supported by the organizational structure, over time the structure will cause the organization to revert back to a strategy the organization structure does support. There is no way to sustain a strategy without the support of the organization. If a firm decides to initiate a superior service strategy, everything the organization does has to be designed to make that happen. Systems have to be adjusted, people’s roles and responsibilities have to be changed, new co-ordination and teamwork need to be developed, communications across all departments and functions must be upgraded, new training will have to be done, and much more. If you don’t do this, the strategy will fail and the firm will end up with the same service level it had before.

  6. What’s up, its nice article about media print, we all understand media is a fantastic source of facts.

    • Don Shapiro says:

      Hi,

      Thanks for commenting on the blog. Not sure how media print relates to an article about strategy and structure. Please clarify.

      Thanks,

      Don Shapiro

      • gol says:

        A city ordinance has been proposed for your community. It would require that all sales of alcoholic beverages take place no closer to churches or schools than two city blocks. If it is enacted into law, six businesses(restaurants and taverns) would be forced to relocate or cease doing business. The ordinance is a response to calls for action by church-sponsored community groups and parent teacher associations. What are the ethical and social responsibility issues here?

        • Don Shapiro says:

          Have no idea what this question has to do with an article about strategy and structure. This sounds more like a high school or college essay question.

  7. mado says:

    what is the contribution of the Organization structure to strategy implementation?

    • Don Shapiro says:

      Hi Mado,

      Really good question. Thanks for asking. The structure of the organization will determine if the strategy can even be implemented and under what conditions the organization can deliver the strategy. Structure is everything that makes up the organization including it’s people, leadership, infrastructure, capital, technology and more. It’s all the parts and pieces that make up the organization and what it does.

      If an organization changes its strategy and starts implementing it, the success of this endeavor depends on the structure. You can’t successfully implement a strategy the existing structure doesn’t support. The implementation of strategy starts by reconfiguring the structure so it will support the new strategy. That may involve creating new departments, hiring people with expertise the organization now lacks, upgrading the skills and attitudes of everyone working for the organization, changing the organization chart, accessing more capital, developing new technology and software, changing physical facilities by either increasing or decreasing them, developing new methods of logistics and distribution if appropriate and so much more.

      A classic example of this issue is now confronting Best Buy. You may have read about the problems Best Buy, the electronics retailer, is now facing with large losses and having to address severe competition from Amazon, Walmart and Costco among others. Their recent press releases talk about matching the prices the other retailers charge.

      The challenge for Best Buy is that first it has to decide what it wants to be and what strategies will help it move in that direction. It seems to be toying with implementing a low price strategy. The problem is that it can’t just cut its prices to match these major competitors because it won’t make any money. All it will end up doing is churning dollars but not increasing profits.

      The reason for this has everything to do with Best Buy’s structure as compared to Walmart, Costco and Amazon. These three competitors are completely structured to deliver low prices and make a profit. All three of them succeed very well at doing this. For example, one of the reasons Walmart can consistently offer low prices across the board is because they eliminated an entire distribution channel between the manufacture and their stores. They did this by developing their own logistics and distribution system which is probably the best in the world. Both the efficiency of this system and the elimination of the profit an outside distributor would build into its prices gives Walmart an edge with their landed cost.

      For Best Buy to pursue a low cost strategy, it takes more than just lowering prices. They have to restructure their company and develop a distribution and logistics system like their competitors that can lower their total landed cost of product to their stores. That would require a huge investment on their part. If they don’t do that and lower their prices, they may increase their revenue but won’t make a profit off it.

      Further, they would be making a huge investment just to match competitors who are already world class at delivering low prices. They aren’t going to be able to beat those prices and they are taking a huge risk just to see if they could and get people to buy.

      You can see that for Best Buy to pursue a low price strategy would require a huge investment, restructuring and risk. Whenever an organization changes its strategy, it has to identify all the elements within its structure that must change to support that strategy. Otherwise, the strategy is doomed.

  8. kirsten erika ignacio lopez says:

    hi! how often does a company or an organization change their strategies?

    • Don Shapiro says:

      Every company is different, every market is different, every situation is different so there is no single right answer to this question. Check out 100 companies and you will find 100 different answers to your question.

      Here is the more relevant point. Companies shouldn’t change their strategy just to change it or because they feel they had their current one for too long or because they see other companies changing theirs. There is no right or wrong number of times to change a strategy.

      Some companies have essentially kept the same strategy for decades with only minor adjustments. Others seem to change their strategies every few years. And then there are those that think a new year means a new strategy. Normally the later don’t last.

      Companies should keep their existing strategies when they work. That means they are producing good results satisfying both shareholders and customers and are holding their own against a changing competitive landscape. You change a strategy only when you have to or it makes sense to adjust to what you see happening in the future. Strategy is the primary way that companies adjust to change or fail to adjust to change. It’s how they keep their firms aligned with their marketplace and help them get an edge over their competition.

      If what a firm has works, no need to change it. If it’s not working or it looks like new developments are going to change the playing field, then altering strategy is a good idea. More often than not, the problem is with companies that change their strategies too often. That is because they haven’t done a good job of figuring out who they are in the market and are not willing to commit to a well thought out, long term approach for their firm.

  9. Noel says:

    Why does the structure of an organization follow the development of the organization
    strategy, rather than the strategy following the development of the structure?

    • Don Shapiro says:

      Noel,

      You have asked the most important question of all. Thank you for posing this. We all know the age old question, which came first the chicken or the egg. For that question, the argument can go either way. In the case of strategy, there is only one choice.

      For an organization to be successful in achieving its goals, it must have the right strategy. Strategy defines who the organization’s markets and customers are, what they want and need, what types of products and services will be offered to satisfy them, how to make, distribute, market and sell its offerings and how the organization will go about doing all that in a profitable way. The how includes everything from how it is made, who makes it, how it is distributed, what sales channels are used, how the market buys or acquires the product and service, how the firm differentiates itself from competition and alternative solutions and so much more.

      So strategy defines what business you are in, who you serve, how you serve your markets, and how you do this in a way that gets enough customers to buy from you a profitable price. There is no way to know what structure an organization needs until it defines its strategies. The organization structure including capital, people, infrastructure, assets, systems and so on can only be known once the strategy is known.

      For example, if you decide that you are going to be a virtual company using other firms to manufacture, distribute, and provide customer service, then you obviously don’t need to build a manufacturing plant, logistics system, customer service center, call service center and all the administrative support people and systems necessary to run these. You can set up in a small office with a small staff of key people because everything else is outsourced.

      On the other hand, if you go back to the birth of Federal Express which grew out of a college thesis, the company’s strategy was based on the ability to deliver packages “absolutely positively overnight.” That was it’s core strategy and that strategy encompassed it’s understanding of who it’s market was, what they needed and were willing to pay a profitable price to get and how it was going to do all this.

      Since nothing existed already to deliver such an amazing promise (at the time), the entire infrastructure to do this had to be built from scratch. That meant they had to create their own airline, with their own planes and distribution centers and trucks and local facilities to deliver on the promise. I believe the initial funding for Federal Express was over $200 million to make this happen. Their strategy detected the organization structure they needed to achieve it.

      Reflect on all this for a moment. If you don’t have a strategy, how in the world can you know what type of organization structure you are going to need? While strategy and structure are indeed married to each other, it’s always strategy that must lead the charge.

      • shirleen valley says:

        thanks so much, this answer have answered a question which has been bothering me for weeks now.Thumps up for the good work.

  10. Manisha says:

    what impact will it have on a company is there isn’t a strategy, structure and system?

    • Don Shapiro says:

      The short answer is that the company will go out of business very rapidly. No business can exist without a strategy. Regardless of its structure and systems or the lack thereof, a business must have a strategy that defines what market and customers it is serving, what product or service it is offering that market, how it gets people to buy what it offers and how it does all this in such a way as to make a profit. You have to answer those questions to even have a business. Without it, you’re just sitting at home playing Frisbee with the dog.

  11. Hi there! Would you mind if I share your blog with my facebook group?

    There’s a lot of people that I think would really enjoy your content. Please let me know. Cheers

    • Don Shapiro says:

      What is the name of this Facebook page and what is it about? Just wondering how you see the concepts of strategy and structure applying to someone working at home. What are the questions and issues where you feel this might apply?

  12. shirleen lilian says:

    Hi DON Shapiro,
    you have done a very fantastic work, thanks for making me get quality marks in my strategy management paper, your answers answered all my questions, not forgetting those who asked the questions on clarification.

    Thumps up, love the blog article

    Valley

    • Don Shapiro says:

      Hi,

      I’m glad to hear this information was helpful. Where are you going to school? What program are you taking?

  13. Hi there, I want to subscribe for this weblog to get latest
    updates, therefore where can i do it please help.

  14. vijay says:

    how strategy affect the organisational structure????

    • Don Shapiro says:

      Interesting question. It depends on whether you are talking about modifying the structure based on a new strategy or how strategy might affect the structure over time.

      When we change a strategy, we need to review the entire organization structure to make sure the organization can do what the strategy calls for. If a firm decides to upgrade its service to become a top service provider, it has to look at what changes are needed in all areas that affect customer service. If the firm simply decides to embark on this new strategy and promote it without making structural changes, they will lose their market because they won’t be able to deliver on the promise.

      Whatever a firm does strategically whether its to become a low cost provider, sell through multiple channels, become an innovator, deliver better service, change the markets it serves, or other major changes, it must make major changes in its structure to successfully perform these strategies. They all call for some type of investment, addition or change to what employees do, and much more. The structure must support the strategy for it to succeed. You can’t change a strategy without changing the structure because the strategy won’t be implemented.

      Over time, a strategy can have a major affect on an organization especially if it has set out to be a top service or quality provider or leading innovator. These call for a continual improvement in how the firm performs. You have to keep finding ways to do things better and new ways to improve what you do. So over time, you keep adjusting the structure in order to maintain the strategy. If you don’t, what started out as great quality or service will end up being just okay quality and service a few years later. Successfully running a business today means you have to be continually changing and improving it to stay with the market and customer.

  15. Vesh says:

    Very interesting article sir. Thank you. Could you please help me figure this out:
    How does strategy relate to the ‘People, Process, Technology’ triangle?

    • Don Shapiro says:

      Hi Vesh,

      You’ve asked one of the most complex questions ever asked on this website though you might not realize it. A book could be written in answer to such a question. I will only offer some perspective.

      The People, Process, Technology triangle was created somewhere around 1990 give or take a few to address the relationship of technology products and development to everything else. Basically, when we looked at the fact that a majority of technology efforts fail, it became clear that more was involved than just the technology itself. We are dealing in a very complex environment.

      The truth is that this triangle is incomplete. People do like things in threes or triangles but that doesn’t mean they always work or at least in the way this triangle has been defined. Recently, some people have suggested that information should be added to this since it is separate from the technology itself as well as the people and process. But does People, Process, Technology and Information really address all the issues.

      Sadly, they do not. We are dealing here in the complex relationship of technology to everything else and how they all work together. Technology cannot exist in a vacuum. It is a means to achieve an end result. So the development of technology must be connected to what it is supposed to do which normally involves people in one form or another. And people must be involved to help develop and implement the technology. Process is the glue that is supposed to hold all this together so everything is integrated. Information is what technology normally produces, holds, analyzes, tracks and so on. So it must be accounted for since that is what people normally use technology for (though not always).

      And yet, all of this still fails to account for the complexity and the reality of how everything fits together from my professional perspective. Whether we say People, Process and Technology or add Information to this, we are still missing the biggest thing of all.

      The purpose is primary.

      What is the purpose of our efforts? What are we trying to accomplish? Who or what will benefit when it is done? How does it makes things better? Who will be better off and why? In all endeavors including technology, the purpose is always primary.

      So even if one accounts for the People, Process, Technology and Information, we are still a ship without a compass and direction. Where are we going with all these people, processes, technology and information? What is the purpose of this voyage?

      As the purpose changes, everything else changes as well. You may need different people, different processes and different technology to produce different information in a different way. So the problem with this triangle is that not only is it woefully incomplete and shortsighted, even expanding it can result in our failing to address the complexity and chaos of the situation.

      Strategy is about what an organization does to achieve it’s primary purposes. It encompasses both the goals, objectives and missions as well as the way they will be achieved. If our firm’s strategy is to grow our market share by selling through more channels, we will need to understand each of those channels so we can create a specific strategy for each one that will produce success. We will need information, metrics, analysis, tracking and more to do that. We will probably need some type of technology solution to improve what we offer and how we offer it to attract customers in each channel. We may even need technology to develop new solutions and develop how we can produce them better.

      Of course, all of that is going to require a mix of people with the right expertise and experience. We need people who understand each of these sales channels and what will be required to successfully sell through them. What these people know must be communicated to the technology people in some way and what technology develops must be communicated back to these people so they can evaluate if the technology can help achieve the strategy. That involves a lot of process to connect all of this and connect it to the information.

      Notice that all the People, Process, Technology and Information are driven by the strategy which includes the purpose and how the purpose will be achieved. Without an effective strategy, the People, Process, Technology and Information are worthless. They have zero value. They mean nothing in themselves unless they are focused on producing a real world result… a result that someone is willing to pay money for because they see a return from doing this.

      If you have read my article, you know that structure includes everything that exist inside of an organization which is necessary for it to achieve a productive result by implementing one or more strategies. So all the people, technology, facilities, tools, systems, communications and more are the structure of the organization. With this world view in mind, I would offer you a much more accurate triangle to replace this earlier, flawed version.

      Remember, the triangle you are asking about was conceived by technology people and people who deal with technology. It was not conceived by strategist and organizational development people with an eye toward the application of systems thinking to how an organization operates to produce results. So let me offer you a CEO’s version of what this triangle should be.

      Strategy, Structure and Process are the three elements of a total organization success triangle that uses technology and even develops technology for sale. The People, Technology and Information are a part of the Structure. The Process is the glue that connects everything together by connecting everything in the structure with everything else in the structure and all of that to the strategy. Process makes sure the right hand, left hand and third eye all know what each other is doing.

      Strategy brings into play the purpose, goals, objectives and missions we are trying to achieve through the use of the structure and process. Strategy tells everyone and everything what to do, when to do it and how to do it. It is the map that guides the ship toward the desired port.

      In other words, what good are People, Process, Technology and Information without a way to tell all of them what to do and why to do it? And what good is all this without being a part of an organized system that makes sure all the parts and pieces help each other to achieve the strategy?

      Every organization on the planet earth is about the successful integration of Strategy, Structure and Process. Everything an organization does is contained within those three elements. There is nothing else except the outside world of customers and constituents. The people, technology and process should be collecting information about those customers and constituents since they are used to create strategy. Strategy grows out of what an organization does for the outside world. So Strategy connects the outside world and the organization together.

      I hope this helps.

      • Vesh says:

        Thank you sir for taking the time out to reply.
        It really helps.
        As a novice business analyst just starting out in the world of systems analysis and design, it makes a big difference to have an experienced individual like yourself help me understand these complex frameworks.

        I understand that the organisation sits firmly on top of this incomplete triangle of ‘People, Process, Technology’. There is always an overriding business strategy that drives organisational strategy as well as information strategy.

        Current and emerging business strategy is enabled, supported, and unconstrained by the people, processes, technology, and information… I think that this equals alignment.

        I also understand that the whole point of all this is to see an increasing return on investment.

        • Don Shapiro says:

          Great summary of the concept. And your last point simply can’t be repeated enough times. There must be an ROI. All that is being done has to produce a return to the stakeholders. If this is a business, then it must produce enough profit to deliver a good return to shareholders. If this is a non-profit, then it must deliver enough benefits to those it serves to justify it’s efforts. If it is a government, it must deliver enough benefit to its citizens for them to see a good return on their tax dollars.

          All the people, technology, processes, structure and more that makes up the organization have to collectively produce an acceptable ROI. That is their one and only job. Most organizations falter when some people and functions forget this. The purpose is always primary.

  16. Vesh says:

    I was looking at the value chain of an organisation. I understand that the value chain model addresses the activities that create, deliver, and support a company’s product or service.

    Although the value chain model emphasizes the activities of the individual firm, it can also be extended to include the firm in a larger value system. This value system is a collection of value chains connected through a business relationship and technology.

    That said, sir, I would just like to here from your perspective, how do you think that the value chain fits into ICT?

    • Vesh says:

      OR How does it relate to an organisations ICT systems?

      • Don Shapiro says:

        Ahh, we’re adding a bit of Michael Porter’s value chain into the discussion.

        In Porter’s original view, he saw technology and information as supporting pieces to the primary functions that drive the value chain. At the time, it made sense. Today we need to modify that thinking.

        ICT in some firms is a supporting function to their primary functions. In other firms, ICT is a part of the firms primary function about what it offers. So ICT can have a substantial effect on value creation. In fact, ICT has resulted in tremendous increases in value because of its ability to do more things in a more efficient way then was possible before.

        Today, a firm must be excellent to outstanding in ICT in order to produce value that is equivalent to their competitors. Innovation in ICT can enable a firm to gain a competitive advantage and deliver even more value for a period of time.

        Even in those firms where ICT is still a support function, it has been shown to substantially increase the value that the firm delivers to customers versus firms that are weaker in ICT.

        So, I would modify Porter’s value chain and include ICT in the primary value chain. When we talk about industries or what goes beyond the borders of a company, ICT is even more important. In manufacturing, just in time inventory to eliminate holding unneeded inventory and only buying inventory that will actually be used requires a co-ordination between a firm and its suppliers through ICT. To me, that is not simply a support function since doing that adds value to the product that is being offered for sale. The more that firms partner with other firms and vendors to produce goods and services, the more important ICT becomes in the value chain.

  17. ignitious says:

    how does structure define strategy in a fast moving consumer goods industry.
    thank u

    • Don Shapiro says:

      Hi Ignitious,

      You’ve asked a good question. The faster the marketplace and innovation moves, the more critical structure is to deliver effective strategy. Speed and change require quick adaptation to a moving target. In consumer goods, today’s hot product can be swept aside by a new entrant that gives people something new and better.

      That clearly happened in 2007 when Apple introduced the iPhone. The rest of the cell phone industry was not expecting something so profound that it would change the entire market. They didn’t even have Apple on their list of potential competitors. They also were not in serious development on a smartphone run by a computer.

      Nokia, Erickson, Samsung and Motorola could have developed such a phone. Steve Jobs mentioned it publicly in 2003. After the iPod became such a success, you would have thought the cell phone industry would see the writing on the wall. But though the signs were clear to some and the idea out there for anyone to grab, none of the cell phone manufacturers were moving down that path in 2007. They were all competing for the best “designer phone.”

      What does this have to do with structure? Everything!!! The very structure made up of culture, people, normal industry practices, systems and more all contributed to how all companies in the cell phone industry viewed the market and innovation. The culture of the industry and each company created a barrier that prevented all their bright, educated, experienced executives and technical experts from recognizing the need to develop such a device quickly. If there were any people in their firms who did see this, their recommendations were dismissed by everyone else. The structure prevented them from seeing where they needed to go and how quickly they needed to get there.

      Structures can blind entire companies and industries to market direction, what consumers really want (that they can’t express in a survey because it hasn’t been invented yet), competitive threats and innovation. The same thing happened and is continuing to happen in the retail industry due to Amazon.

      Walmart, Target and all the other retailers did not see Amazon as a potential threat when it first expanded beyond books. They literally didn’t think that many people would ever buy on the internet. Now, Amazon is Walmart’s biggest worry and threat. Yet, even though Walmart now recognizes this fact and is working hard to address it, they have failed to find an effective solution.

      The structure of Walmart comprised of its culture creates a way of thinking that blinds them to what Amazon does. Literally, the difference in the culture of the two organizations produces totally different thought processes and views of how to attract and satisfy consumers. Even though Walmart has created an on-line website and now created a separate division with its own President to run that operation, they still don’t understand what they are really competing against nor how to use what they have to out position themselves against Amazon.

      So structure is not simply about a list of people, positions, resources, systems, facilities and such that make up an organization. Structure is also the culture of the organization which defines the common way people think about things and view the outside world.

      To deal in a rapidly changing consumer environment, organizations need to find ways to break out of their cultural limitations. This isn’t just true for the consumer industry. It’s true for all industries and has been long known going back to Lockheed Aircraft creating it’s famous “Skunk Works” operation completely outside of its corporate structure. General Electric and Bell Telephone (Bell Labs) did the same thing. They realized that the culture of their organizations which worked great to deliver what had been created was not effective at innovation. They had to create completely separate entities far removed from corporate operations that could focus on innovation.

      That innovation had to be coupled with leadership at the top that knew how to integrate what these “Skunk Works” created back into the corporation. Walmart has not figured this out yet while the solution is so obvious to me. Of course, I’m not a part of their culture so I can easily see strategies they are blind to.

      Addressing speed and innovation requires a certain type of organization culture. Right now, we are seeing many storied brand names that are about to go out of business because they couldn’t respond to all the changes. In rapidly evolving markets, structure is critical for success.

  18. Cristine says:

    Why is it important for managers to carefully consider the type of organizational structure that they use to implement their strategies?
    thank you

    • Don Shapiro says:

      Good question Cristine. Simply put, if you implement a strategy with the wrong structure, the strategy will fail. The people, human resource programs, assets, facilities, communications, technology, organization culture and values, and methods of leadership can be configured in a variety of ways. How they work together determines what an organization can and cannot do.

      Take the retail industry for example. Amazon, Costco, Walmart and Nordstrom each have different strategies and very different structures to implement those strategies. One of them could not just decide to be like the other. They would have to change their structure dramatically to do so.

      In N’Out Burger, Five Guys Burgers and Fries, McDonalds and Shake Shack all are very different from each other which is reflected in their structures. One could not become the other without changing those structures. It is the structure that enables them to do what they do the way they do it.

      You might want to reread the article and the entire comment thread to learn more about all the issues that affect the successful implementation of a strategy. When I look back over this comment thread, there is a small book worth of information to help you learn more about the whys and hows of this.

  19. Tapendra says:

    How does the operationlizing stregy is differ from institutionalizing stregy

  20. Tapendra says:

    How does the operationlizing stregy is differ from institutionalizing stregy. In point basic

  21. Tapendra says:

    Hell sir,How stregic management is political game.

  22. Thato Sebeso says:

    How does Organizational Architecture assist in strategic alignment and strategy implementation?

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