Core Process Structure forms around an organization’s basic method of transforming raw materials into !nished products. Every organization has at least one core technology that includes raw materials, activities that turn inputs into outputs, and underlying beliefs about the links among inputs, activities, and outcomes (Dornbusch and Scott, 1975).
Core technologies vary in clarity, predictability, and effectiveness. Assembling a Big Mac is relatively routine and programmable. The task is clear, most potential problems are known in advance, and the probability of success is high. Its relatively simple core technology allows McDonald’s to rely mostly on vertical coordination.
In contrast, Harvard’s two core processes—research and teaching—are far more complex and less predictable. Teaching objectives are knotty and amorphous. Unlike hamburger buns, students are active agents. Which teaching strategies best yield desired
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results is more a matter of faith than of fact. Even if students could be molded predictably, mystery surrounds the knowledge and skills they will need to succeed in life. This uncertain technology, greatly dependent on the skills and knowledge of highly educated professionals, is a key source of Harvard’s loosely coordinated structure.
Core technologies often evolve, and signi!cant technical innovation calls for corre- sponding structural alterations (Barley, 1990). In recent decades, struggles to integrate new technologies have become a fateful reality for many !rms (Henderson and Clark, 1990; Christensen, 1997). Existing arrangements often get in the way. Companies are tempted to shoehorn innovative technologies into a box that !ts their existing operations. As we saw with the decline and fall of Kodak, a change from !lm to digital photography, slide rules to calculators, or “snail mail” to e-mail gives an advantage to new players less committed to the old ways. In his study of the disk drive industry from 1975 to 1994, Christensen (1997) found that innovation in established !rms was often blocked less by technical challenges than by marketers who argued, “Our customers don’t want it.” By the time the customers did want it, someone else had grabbed the market.
Some organizations are more susceptible than others to outside in”uences. Public schools, for example, are highly vulnerable to external pressures because they have limited capacity to claim the resources they need or to shape the results they are supposed to produce. In contrast, an institution like Harvard is insulated from such intrusions by its size, elite status, and large endowment. It can afford to offer low teaching loads, generous salaries, and substantial autonomy to its faculty. A Harvard diploma is taken as suf!cient evidence that instruction is having its desired effect.
Strategy and Goals Strategic decisions are future oriented, concerned with long-term direction (Chandler, 1962; Mintzberg, 1994; Roberts, 2004). Across sectors, a major task of organizational leadership is “the determination of long-range goals and objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary for carrying out these goals” (Chandler, p. 13).
A variety of goals are embedded in strategy. In business !rms, goals such as pro!tability, growth, and market share are relatively speci!c and easy to measure. Goals of educational or human services organizations are typically more diffuse: “producing educated men and women” or “improving individual well-being.” This is another reason Harvard adopts a more decentralized, loosely integrated system of roles and relationships.
Historically, McDonald’s had fewer, more quanti!able, and less controversial goals than those of Harvard. This aligned well with the centralized, top-down McDonald’s structure.
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But that structure has become more complex as the company’s size and global reach have fostered levels of decentralization that allowed outlets in India to offer vegetarian cuisine and those in France to run ads attacking Americans and American beef (Tagliabue, 1999; Stires, 2002; Arndt, 2007).
Understanding linkages among goals, structure, and strategy requires a look beyond formal statements of purpose. Schools, for example, are often criticized if structure does not coincide with the of!cial goal of scholastic achievement. But schools have other, less visible goals. One is character development, often espoused with little follow-through. Another is the taboo goal of certi!cation and selection, as schools channel students into tracks and sort them into careers. Still a third goal is custody and control—keeping kids off the streets, out from underfoot and temporarily away from the job market. Finally, schools often herald honori!c goals such as excellence. Strategy and goals shape structure, but the process is often complex and subtle (Dornbusch and Scott, 1975).
Information Technology New technologies continue to revolutionize the amount of information available and the speed at which it travels. Once accessible exclusively to top-level or middle managers, information is now easy to get and widely shared. New media have made communica- tion immediate and far reaching. With the press of a key, anyone can reach another person—or an entire network. All this makes it easier to move decisions closer to the action.
In the 2003 invasion of Iraq, for example, U.S. and British forces had an obvious advantage in military hardware. They also had a powerful structural advantage because their superior information technology let them deploy a much more “exible and decentralized command structure. Commanders in the !eld could change their plans immediately in response to new developments. Iraqi forces, meanwhile, had a much slower, more vertical structure that relied on decisions from the top. A major reason that Iraqi resistance was lighter than expected in the early weeks was that commanders had no idea what to do when they were cut off from their chain of command (Broder and Schmitt, 2003).
Later, however, the structure and technology so effective against Iraq’s military hadmore dif!culty with an emerging resistance movement that evolved into a loosely connected structure of entrepreneurial local units that could adapt quickly to U.S. tactics. New technologies like the Internet and cell phones enabled the resistance to structure itself as a network of loosely connected units, each pursuing its own agenda in response to local conditions. The absence of strong central control in such networks can be a virtue because
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local units can adapt quickly to new developments and the loss of any one outpost does little damage to the whole.
Nature of the Workforce Human resource requirements have also changed dramatically in recent decades. Many lower-level jobs now require higher levels of skill. A better-educated workforce expects and often demands more discretion in daily work routines. “Millennials” typically ask for higher salaries and more favorable working conditions than their predecessors. Increasing specialization has professionalized many functions. Professionals typically know more than their supervisors about technical aspects of their work. They expect autonomy and prefer reporting to professional colleagues. Trying to tell a Harvard professor what to teach is an exercise in futility. In contrast, giving too much discretion to a low-skilled McDonald’s worker could become a disaster for both employee and customers.
Dramatically different structural forms are emerging as a result of changes in workforce demographics. Deal and Kennedy (1982) predicted early on the emergence of the atomized or network organization, made up of small, autonomous, often geographically dispersed work groups tied together by information systems and organizational symbols. Drucker makes a similar observation in noting that businesses increasingly “move work to where the people are, rather than people to where the work is” (1989, p. 20).
Challenges of Global Organization In sum, numerous forces affecting structural design create a knotty mix of challenges and tensions. It is not simply a matter of deciding whether we should be centralized like McDonald’s or Amazon or decentralized like Harvard or Zappos. Many organizations !nd that they have to do both and somehow accommodate the competing structural tensions.
Two electronics giants, Panasonic (formerly Matsushita) in Japan and Philips in the Netherlands, have competed with one another around the globe for more than half a century. Historically, Panasonic developed a strong headquarters, while Philips was more decentralized, with strong units in different countries. The pressures of global competi- tion pushed both to become more alike. Philips struggled to gain the ef!ciencies that come from selling the same products around the world. Meanwhile, as Panasonic gradually discovered, “No company can operate effectively on a global scale by centralizing all key decisions and then farming them out for implementation. It doesn’t work . . . No matter how good they are, no matter how well supported analytically, the decision-makers at the center are too far removed from individual markets and the needs of local customers” (Ohmae, 1990, p. 87).
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