impact of leadership on identifying right organizational designs for turbulent times

The Impact of Leadership on Identifying Right Organizational Designs for Turbulent Times 57

Impact of Leadership on IdentifyingRight Organizational Designs for Turbulent Times

Organizations of all sizes, types across various industries are experiencingturbulent forces of change from the environment in the business world,both nationally and internationally. We are in an era of global business—a ‘one world market’. The traditional orientation of companies workingjust within national boundaries is declining worldwide. The ability ofbusiness to respond to the newer challenges of globalization requiresclarity of vision and understanding about the behavioral role ofmanagement and organizations in this constantly changing new world(Brake et al., 1995). It is up to the leaders and followers alike to positionthe organization to compete and win in the face of increasing externalglobal market pressures. The expressed purpose of this paper is to addnew insights and foresight to an existing body of knowledge on the roleand impact of leaders to identify and implement the right organizationaldesign(s) to fit the culture, strategy, people, and unique challenges facingeach organization. Equally important this paper is intended to articulatethe necessary prerequisites that must be in place to ensure that thedesign(s) is sustainable to achieve the desired outcomes for theorganization.

© 2010 IUP. All Rights Reserved.

Christopher Mosley* and Sergio Matviuk**

* Research Scholar, School of Global Leadership and Entrepreneurship, Regent University, US.E-mail: [email protected]

** Assistant Professor, School of Global Leadership and Entrepreneurship, Regent University, US.E-mail: [email protected]

New Organizational Reality: Winds of ChangeUnprecedented technological advances, unparalled diversity, winds of rapid change,innovation in products and designs, escalating strategic and operational competition,cultural and ethical dilemmas, employee exodus and growing unrest by stakeholdersfor greater productivity, rising performance demands, etc., are spurring organizationalleaders and managers to think how to structure organizations to better respond to thisreality, and survive ultimately.

In turbulent times, an enterprise has to be managed both to withstand sudden blowsand avail itself of unexpected opportunities. It is not an either or proposition, but rathera paradoxical situation which must be confronted by organizations and its leadershipand followers. This means that in turbulent times the fundamentals have to be managed,and managed, well (Drucker, 1980).

The IUP Journal of Soft Skills, Vol. IV, Nos. 1 & 2, 201058

Skeptical leaders may be wondering—is it really worth it? Why to bother during theseturbulent times? Would it not be far easier to just call it a day, or start all over, or blowup the structure, or simply give up trying to use the organizational structure as a strategicasset at all? Against the backdrop of such challenges one must recall how great leaderslike Gandhi, Martin Luther King Jr., Abraham Lincoln have changed the course of historywith tremendous vision and courage without placing an emphasis on organizationalstructure to support their efforts. However, when it comes to business, it is cautionedto replicate the same logic because organizations are dealing metaphorically with an animalof a far different shape, complexity, and the dynamic forces at work in the industry requireunity of purpose. Organizations, thus enable people working in groups to accomplishgoals that none of them could do on their own. In this way, they are able to harnesscomplex and simple technologies and ingenious solutions to achieve greatness in a farmore profound and sustainable fashion (Mitroff, 2004).

Leadership 101: Step Up or Watch Out for the StampedeThe speed of change will overtake the organizations where the leaders do not adopta new mindset, first themselves and solicit the hearts, minds and souls of followersto join suit on this quest to transform the organizations to successfully operate and dowell in the new landscape. In support of this idea, an even bolder declaration is madethat a leader who does not inspire is like a river without water (Secretan, 1999).

Thus, organizations work the way they do because of how we work, how we thinkand interact: the changes required ahead are not only in our organizations but inourselves as well (Senge, 1990). This statement speaks of the importance of leadersfocusing on personal mastery before trying to influence change within the organizations.Leaders have to bring the changes they want to see in the world (Potts Michel, 2002).There is no way for leaders to get around this question which has stood the test oftime for leaders: To be or not to be: that is the question, whether ’tis nobler in the mindto suffer the slings and arrows of outrageous fortune, or to take arms against a sea oftroubles (Shakespeare, 2006). This article encourages enlightened leaders to face thereality of the latter and keep rowing ahead to find ways to navigate the organizationto overcome these torrential winds and raging sea of the business world to safer groundon this distant horizon.

Static Environment: Things of the Past, Inspire FollowersStatic is defined as pertaining to bodies at rest or forces in equilibrium; not involvedin or with motion (Landau, 1999). While it is human nature to try to control theenvironment to ensure predictability, order, and even flow of events, enlightened leadersquickly accept the reality that it is no longer possible to operate organizations in the21st Century without experiencing chaos and unpredictable winds of change. Inrecognition of this fact, the world and the workplace have moved into the 21st Centurywith an increasing awareness of change in individuals, families, communities, countriesand organizations (Lewis, 2006).


Leaders Creed: First Adopt New Mindset, Not New StrategyIt all sounds a bit scary for the unprepared, uninformed, and unwilling leaders runningorganizations; however, it does not have to be for the leaders who are willing to dosomething about it. To move from static to adaptive thinking, enlightened leaders actuallydo not need to have the vision; they need to possess the willingness and ability todraw the vision from their people and inspire and empower those people to do whatit takes to bring the vision into reality. Indeed, enlightened leaders nurture and encouragetheir people to be open, creative, and innovative and find what it takes to achieve theirshared objectives. This brings out the best in people (Oakley and Krug, 1991). At thecore of this whole discussion is a critically important paradigm shift required in theminds and hearts of a leader; it represents a creative shift from the thinking usheredin by Frederick Tayl In the Principles of Scientific Management. This will require, aboveall, very different assumptions about people in organizations and their work: one doesnot manage people, and the task is to lead people. And the goal is to make the specificstrengths and knowledge of each individual productive (Drucker, 1999).

While the words in this paper may be easy to read and digest, it is far more difficultto enact because of the earlier notion that people are inherently resistant to change.Leaders must overcome the fear of failure and accept the reality by making informed,decisive and timely changes in the organization. This will help enlightened leaders toavoid the trap of creating a failed legacy defined and guided by fear. For those whodo not heed the warning, their legacy of leadership for the organization will read: wecan easily forgive a child who is afraid of darkness. When man is compelled to lookat the light, will he not have the pain in his eyes which will make him turn away totake in the objects of vision which he can see? The real tragedy of life is when menare afraid of the light (Plato, 360 B.C.E). The light will help to prepare leaders andilluminate their path.

Resist Redesigning Before Transforming CultureIn the face of changes in the external environment and internal resistance, the blindedleaders want to immediately get out the pen and paper and start redesigning work flows,reconfiguring organizational structures and reporting relationships. While these exercisesmay soothe the ego of the leader, they will not help the organization and followers toachieve the desired success aspired by all involved. This point is irrefutable becausealthough the tools and techniques may be present and the change strategy implementedwith vigor, many efforts to improve organizational performance fail because thefundamental culture of the organization—values, ways of thinking, managerial styles,paradigms, approaches to problem solving—remain the same (Cameron and Quinn, 2006).

Culture is a powerful force and has to be reckoned with as such instead of attemptingto ignore or even worse trying to minimize the affect that it has on the organization andthe people in it. Organizational culture holds your organization’s aspirations and the spiritof the place. Its beliefs and values define the organization’s core. To implement a strategy


that requires people to change the way they do things, leaders need to work beyond theoperational plan and plan to change culture as well (McGuire and Rhodes, 2009).

First, to address the cultural dynamics of the organization, leaders need informationinstead of allowing their unsubstantiated beliefs, emotions, assertions, past experiencesand successes of yesterday and old and untested ways of doing things to guide them.One of the worst things that a leader can do is to make assumptions, unfoundedpredictions about what is driving behaviors without doing an assessment of theorganization. Using the Organizational Cultural Assessment Instrument (OCAI) is oneof many research tools available to help in this process. It allows the leaders andfollowers to work together to determine both the ‘now’ and ‘preferred’ culture to helpthe organization to achieve its desired goals.

For instance, the ‘Clan Culture’ is commonly associated with a friendly place to workwhere people share a lot of themselves and leaders are considered to be mentors. Theorganization places a premium on teamwork, participation, and consensus. On the otherhand, the ‘Adhocracy Culture’ is dynamic, entrepreneurial and a creative place to work.The emphasis is on the leading edge and the organization encourages individualinitiative and freedom. As a polar opposite, the ‘Hierarchy Culture’ promotes a veryformalized and structured place to work. The management of employees is concernedwith secure employment and predictability. Lastly, the ‘Market Culture’ is bestcharacterized as a result-oriented organization. The leaders are hard drivers, producers,and competitors and so is the organizational style (Cameron and Quinn, 2006).

The OCAI works well in subunit cultural assessments and for the overallorganization. However, a word of caution is applicable here: please do not start changingthings too quickly without seeing a clear picture of what is the current and preferredculture. This theory works in a similar fashion as the one used in other circles. If leadersare interested in assessing the leadership styles and teams’ dynamics within theorganization they might deploy a Myers Briggs Survey or a DISC Profile of the team(Briggs and Myers, 1998). These parallel applications are offered here for comparisonand illustrative purpose because leaders stand the risk of making a huge mistake byrushing to conclusions and solutions without the right information to guide theirdecisions. Do so at the peril of the organization!

With the realization that no enlightened leader wishes the organization to perish onhis or her watch, organizations playing on the global business stage must affect positivechanges in the culture in the wake of unparalleled change in the global marketplaceby doing the following things:

• Consciously developing a global organizational culture;

• Reframing diversity from a global perspective;

• Preparing employees for short to midterm global rotations;

• Facilitating learning about culture and their values, beliefs, expectations, andbehaviors in order to be successful worldwide;


• Developing effective multicultural teamwork and structures for collaboration;and

• Managers being able to manage, transcend and leverage cultural diversitiesappropriately and effectively (Walker et al., 2003).

Strategic Thinking: Precedes and Supports Organizational DesignIt is also important to take every precaution to minimize confusion, inertia, inefficiency,miscommunications and mishaps in the organization. It must be remembered that thecompetition is running the same race, and every step counts. Leaders and followershave to work together to craft and chart a clear, well analyzed, developed, and thought-out, written, and carefully constructed strategy for the organization. In strategic thinking,one first seeks a clear understanding of the particular character of each element of asituation and then makes the fullest possible use of human brain power to restructurethe elements in the most advantageous way. No matter how difficult or unprecedentedthe problem is a breakthrough in the best possible solution can come only from acombination of rational analysis, based on the real nature of things, and imaginativereintegration of all different items into a new pattern, using nonlinear brain power(Ohmae, 1982).

This suggests that organizational leaders must do the work to first understand thecharacter or true essence of the situation before trying to change anything. Characteris expressed in terms of an organization’s developmental pattern—the manner in whichit grows, develops, and renews itself (Hamermesh, 1986). It is hard, but vitally importantfor the leaders and followers to get it right for the organization, which is the primarygoal of strategic thinking in the first place.

Organizational strategy answers three fundamental questions: (1) why an organizationexists, why are we here; (2) what is it, what are we doing; and (3) how it competes,where are we going in the future. In other words, structure and systems are properlyregarded as means for realizing organizational strategy (Keidel, 1995). It is also importantto appreciate the fundamental and significant fact that all models of organizations ascoherent entities can be reduced to two basic views: organizations as social systems,sustained by the roles allocated to their participants, and organizations as associationsof self-interested parties, sustained by the rewards the participants derive from theirassociation with the organization (Lammers, 1987).

Strategic thinking has two major components: insight about the present and foresightabout the future. Visual thinking is the process that stimulates both of these by helpingus link our intuitive sense of the events in the world with our intellectual understanding(Sanders, 1998). For strategic thinking to serve as a useful resource and construct forthe organizations, leaders and followers must dig deep to find and understand thestrategic core—all of the resources that can be exploited in a good way so as to confera sustained advantage. These are resources which cannot easily be replicated by others(at least in the short-term), then clearly it must be encompassed within the boundary


of the organization. Four key pieces of this jigsaw are: (1) core skills; (2) corecompetencies; (3) distinctive capabilities; and (4) strategic assets (Ferguson andFerguson, 2000). Using a metaphor from the game of hockey, the key to success is notto skate towards the puck, but, instead, anticipating where the puck is going and getthere ahead of it. The same thing could be said of great leaders—they anticipate wherethe change is going and make sure their organization get there first (Sanders, 1998).

Given the fierce winds of change in the external environment, the organization hasto do the necessary work of strategic thinking to face a certain future fraught withdisaster. If you fail to plan, you plan to fail. It stems from a universal acceptance ofthe fact that an organization which does not confront change, or sees no need to innovate,will stagnate, decay and eventually die. Trees begin to die from the top downwards,and so this process in business usually stems from the chief executive and those aroundhim or her (Adair, 1990). To mitigate the inherent inertia to change brought on by newstrategies, it is very important for the leader to encourage participation in the process,communicate the strategy across the organization with special emphasis on what andwhy of the strategy and to remain flexible as this is not a static, but fluid process. Ifyou want the strategy to be embraced, accepted, internalized and adopted by theemployees rather than some edict from the top, there is no substitute for improvingcommunication as the strategy unfolds the organization (Morgan, 1997).

Spirit of Finding Right Organizational Design:Let Questions Lead to Right Answer(s)Once the organization has gone through the process of strategic leadership—thinking,acting, and influencing the changes necessary to achieve the desired objectives for theorganization, it is time to develop a structure to support and roll out the strategy (Hughesand Beatty, 2005). Organization designs that facilitate variety, change, speed, andintegration are sources of competitive advantage (Galbraith, 2002). But where do youstart in the quest for the right design for the organization? Right inside the organizationlies the answer. This is no time to start looking outside of the organizational doors forthe magic bullet after all of the work is done to assess and transform the culture,developing a compelling strategy and reshape the paradigm thinking of leaders andfollowers. Now is the time to put it onto action. However, it is very easy to get myriadin all the various theories and types of design out there. Start with the basic questionsand the answers will lead the organization to the right design. First, why are we here(mission, and values)? Where are we trying to go (vision and strategy)? What changesdo we need to make to get us there (organizational design)? Keep it simple and theorganization has a far better change of landing in the right spot when it comes toorganizational design.

Choice Design Best Suited for Organization, Not LeadershipThere are five pervasive principles which have to underpin the work of finding thebest design for the organization:


1. There are both technical, human and strategic requirements;

2. It is an ongoing part of the job of the leader; flexibility is the key;

3. Design emanates from the overall vision and strategy for the organization;

4. Balance the effectiveness for the design and the political dynamics of theorganization; and

5. The ultimate goal of the design is to use creatively the new structural materialsand collateral technologies to achieve a fundamental new architecture that willfocus and unleash the competitive strengths embedded in each organization(Nadler and Tushman, 1997).

For these reasons, the remaining thrust of this article will highlight the strengthsand weaknesses of various useful design, but there will not be a lot cast on the designthat is a panacea for all organizations; there is no such animal out there and to suggestsuch a thing would be irresponsible and a major disservice to leaders and followersin organizations.

Design Puzzle: What is Out There for Best Use?With questions as your best asset for this discovery to find the design(s) best suitedfor the organization, leaders have to lead the way. Now there is a role for strategicplanners in the process, but leaders must not and cannot delegate away the primaryresponsibility of designing the organization for future competitive advantage; it is theleader’s job to do and this is stressed because there are some unenlightened leaderswho see it differently. There is no shortage of organizational transformationalmovements, and redesign efforts out there that have found failure at this point afterthe best made plans have been developed and implemented.

For the less complex organization there is the basic structure of organization oftenreferred to as the ‘Simple Structure’ (i.e., Mrs. Fields Cookie Shops). It is commonlyused when there is little or no competition and when it is for smaller organizations.The most compelling aspects will be to improve control and eliminate work, so thatthe size of the organization can be kept down and direct control can be retained (Groth,1999). There is a theme needed for control here. However, this design is inherentlyless useful when an organization wants to grow and there is a need for increasingdelegation of responsibility. Next, there is the ‘Decentralized Design’ driven byentrepreneurial subunits that are loosely connected to a central corporate identity(McDonalds). These organizations must be prepared to honor the subunit autonomy;there is a possible danger of losing harmony and synergy across the organization toachieve common goals (Robey, 1986).

This brings the subject of organizational design full circle to the more traditional‘Functional Design’ where all human knowledge and skills with respect to specificactivities are consolidated, providing a valuable depth of knowledge for the organization.


The main weakness of the functional design structure is a slow response toenvironmental changes that require coordination across departments. In the globalmarketspace, leaders should proceed with a great deal of caution in trying to maintainor institute the functional structure with escalating competition at the local levels aroundthe globe (Daft, 2007).

In business environments where innovation is king and being first to market hasa premium associate with it, the design structure is critical. For these situations, the‘Adhocracy Design’ may fit the need nicely. It is a highly organic structure with littleformalization of behavior with less formalization, standardization and reverence for unityof command. Lack of good and consistent communications, conflict and aggressivenessare necessary elements of the model (Mintzberg, 1983).

As a means to foster speed, flexibility and timely decision-making, the ‘DivisionalStructure’ may have merit for some organizations. Pioneered in the automobile andmanufacturing industries, it is designed essentially to foster self-contained units. Whilein the Functional Structure, subunits have the propensity to become so engrossed withtheir specialty that they forget the organization’s overall goals. Although the DivisionalStructure addresses this problem by placing full responsibility in the hands of thedivisional manager, it has a major weakness associated with duplication of resources,and activities stimulate conflict and coordination problems (Robbins, 1983).

Given the increasing global nature of business, there are a few designs which arespecifically crafted for this environment: (1) Multi-Domestic; (2) Transnational;(3) Global; and (4) International. Below is a chart to compare and contrast the similaritiesand differences (Table 1):

Types of Structure Nature of the Structure

Multi-Domestic • Decentralized, geography based

• Used for new market entry

• Must be monitored for efficiency

Transnational • Decentralized and centralized focus

• Good for varied strategies

• Very complex

Global • Centralized approach

• Similar products and services worldwide

• Low on optimal sourcing and local responsiveness

International • Centers of excellence or hub for each product

• Maximize outsourcing

• Low local responsiveness due to same products (Burton et al.,2006)

Table 1: Comparative and Contrasting Images of Structural Designs


Design Road to the Future: Boundaryless OrganizationAll this said, the key is to remain flexible rather than sticking to a single design forlife. This kind of thinking is doomed to fail the organization. This way of thinking isassociated with the old critical factors of business: size, role clarity, specialization, andcontrol. In this new era, this thinking has been replaced with a new paradigm: speed,flexibility, integration and innovation. In their quest to achieve the success factors ofthe 21st Century, organizations must confront and reshape four types of boundariesregardless of the desired structures in the future (Table 2).

Boundaries Old Thinking New Thinking

(1) Vertical Hierarchy Ideas

(2) Horizontal Walls between Rooms Cross Functional

(3) External Barriers between Stakeholders Efficiency, Results

(4) Geographic Isolation Innovation (Ashkenas et al., 2002)

Table 2: Types of Boundaries

ConclusionThis paper has demonstrated that there is not a silver bullet out there for everyorganization to use as the ultimate design to advance the cultural and strategicalobjectives. We are well-aware that this makes the leader’s task of finding andimplementing a design even more challenging; however, this discovery when donewell, has the potential of distinguishing the great organizations from the rest. Thereis no substitute for the role of effective leadership and followership in thisdiscovery for the right design. Reason being, the leader has to leave the organizationin a better posture than when he or she arrived and a good design helps in thisquest (Peterno, 2009).

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