Strategic Management: Formulation and Implementation

Coordination Changes: Changing Structure And Culture

Larger, older companies at the mature end of their life are to cut costs as well as gain flexibility and responsiveness. Some changes are designed to tackle new opportunities by creating new ways of combining resources and coordinating activities.

Changes in structure are often associated with acute episodes of dramatic downsizings. However, there are two principal mistakes some companies make in reorganizing. First, they exhibit strategic blindness, turning the quest to ensure value added into mindless downsizing and delayering, on the assumption that leanness automatically equals effectiveness. Second, some companies assume that if a little cutting is good thing, a lot must be even better.

Cutting people to cut costs, if poorly managed, can actually increase some costs, such as the hidden costs of overload tasks have not disappeared, just the people to do them. Therefore, sustainable downsizing that will result in wellfunctioning organization requires more leadership attention than a onetime costsaving through layoffs.

Culture has a major influence on organizational life. Culture change in an organization can be a complex and timeconsuming process. For example, a revitalization follows the "critical path" outlined by Michael Beer, Russel Eisenstat, and Bertram Spector (1986); change work process first, then attitude change will follow.

Therefore, the proper management of an organization requires that managers not only understand culture and its role but stand ready to alter its compositions and direction of force.

The need for flexibility suggests that in some cases coordination changes occur informally. Networks floating teams that work across functions, share information, and operate without bureaucracy are a potent tool. Companies can enhance teamwork and participation through networkbuilding. Peter Drucker recently used the image of symphony orchestra to describe the new model of the leaner, flatter corporation.

Performers with different skills concentrate on perfecting their professional competence, while a single conductor coordinates the overall performance; performers with similar specialties form selfmanaged work teams, operating without a bureaucratic hierarchy above them. In this model, relationships, communication, and the flexibility to combine resources are more important than the "formal" channels and reporting relationships represented on an organizational chart. The horizontal dimension the process by which all the divisions and departments and business units communicate and cooperate is the key to getting the benefits of collaboration.