tribal business models
TRANSCRIPT
Refining Your Business Structure
Sub HeaderLeonard Greenhalgh, PhDProfessor of Management
Director, Native American Business ProgramsTuck School of Business at Dartmouth
To recap: Becoming strategically focused means developing sources of competitive advantage
Do it better– Operational excellence strategy
Do it differently– Differentiation strategy
Gain customer loyalty– Customer relationship management
strategy
Excellent customer-oriented firms…
have an operations strategy that is aligned with their value proposition, their systems
and processes, and their structure, with employees empowered to create
increasing customer value
The Cottage Industry, 1612
(this is the original, co-located multi-functional team)
Grandmother
Husband
Son, 18
Daughter, 10
Son, 12
Wife
Customer
create value
What motivated them?
They had a local monopoly
But they didn’t exploit the situation; they were customer-focused
• they charged reasonable prices
• they had an operations strategy that produced the highest quality they were capable of
• they worked harder than they needed to
In 1612, such relationships were preserved during growth
The same sense of commonwealth was preserved at the value-chain level.
Let’s see how…
The textile enterprise grew through outsourcing, with value-chain roles based on core competency
Weaver Customer
Metalworker
Woodworker
Fuel SupplierTransportati
on
Tailor
Embroiderer
Overcoat-MakerMerchant
This is the original value chain:It’s a communal organization(a network of relationships)
Sheep-Raising
Sheep-Shearing Wool-
Spinning
Yarn-Dyeing
In 1862, the Industrial Revolution produced advantages of superior
technology and scale of operations
The borrowing produced the Westernclassic organizational form
Top Management
Middle Management
Rank & File
Strategic Direction
Functional Implementation Plan Organize Direct Control
FunctionalTasks
But the Chain of Command Principle also
produces corporate “silos” or “stove-pipes”
R&
D
OPERATI
ONS
SALES
DELIVERY
ACCOUNT
ING
Customer
push
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
• Information explosion
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
• Information explosion
• Globalization
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
• Information explosion
• Globalization
• Technology improvements
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
• Information explosion
• Globalization
• Technology improvements
• Time-based competition
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
• Information explosion
• Globalization
• Technology improvements
• Time-based competition
• Quality Revolution
Western hierarchical (“top-down”) organizations
that had prospered in the 20th Century
faced new challenges in the 21st Century
• Information explosion
• Globalization
• Technology improvements
• Time-based competition
• Quality Revolution
• Unprecedented competitors
Tasks within Core Organization
1. Identification of market opportunities2. Selection of strategic relationship partners3. Coordination of functions
Core Organization
Customer
A new form of competitor-The “Virtual” or Value-Integrator Organization of 2012
create value
Tasks within Core Organization1. Identification of market opportunities2. Selection of strategic relationship partners3. Coordination of functions
Core Organization
Call Center
Research & Design
Producer
Distribution
Financial Services
Customer
A new form of competitor-The “Virtual” or Value-Integrator Organization of 2012
create value
The Virtual Organization is an old form…
remember the original, co-located multi-functional team?
Grandmother
Husband
Son, 18
Daughter, 10
Son, 12
Wife
Customer
create value
True Joint Venture(= a value-integrator organization)
JV
note: dotted line indicates ownership relationship; solid line indicates strategic outsourcing relationship
Customer
How would you structure an organization to handle a series of
projects?--and what is
the role of management in such organizations?
Growth is not for everyone
Large
Multi-divisional
Holdingcompany
Small
Scale of
Business
Entrepreneur in the business
Delegated management
Narrow BroadNiche
Key points to remember….
1. Different parts of the organization need a structure tailored to their roles
2. The structure is good when it: --increases strategic alignment--enhances relationships