Chapter 13 What advantages did the horizontal anarchist approach

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C H A P T E R 1 3

ORGANISING FOR SUCCESS

Illustration 13.1

Structural fault: Qwiksters quick demise

This is an interesting illustration in apparently showing over-enthusiasm in following the

prescriptions of Clay Christensen for incumbents facing disruptive innovation (Chapter 9):

splitting off the legacy business does not work here. And, if students need persuading that

structure matters, then the Qwikster experience should be enough: getting the structure wrong

knocked more than 60 per cent off the value of the company.

1. How do the pros and cons of the Qwikster structure fit with those associated with the

divisional structure (see Section 13.2.2)?

Pros and cons of the Qwikster structure: in terms of Section 13.2.2, the new structure

2. In the light of the planning, cultural, market and targeting systems discussed in Section 13.4,

what else would Netflix have needed to do to manage the separation of the streaming

business and the rental business?

What else could Netflix have done: this question points to how systems must evolve along

with strategies and structures, the configuration point of Section 13.4. Three elements are

salient in particular:

Netflix will require a new planning system, given that before everything was

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Illustration 13.2

Reckitts new strategy and structure

1. In what ways would the new structure support the new strategy?

Reckitts strategy was focused on emerging market growth and switches from a structure

2. Assess the relative advantages of Unilevers smaller regional units and Procter & Gambles

two global business units in these consumer markets (refer to Section 13.2.4).

Unilever has smaller geographical units than Reckitt, closer to the local subsidiary model

of Section 13.2.4: this will help it be responsive to local needs in a way that Reckitt may

Illustration 13.3

Occupy Wall Street: How anarchists do structure and systems

This is an unusual organisational context, and perhaps stimulating therefore for students. They

may be intrigued by the thought that even anarchists need structures and systems.

1. What advantages did the horizontal anarchist approach to structure and systems have?

Advantages of horizontal anarchist approach: the loose horizontal model seemed to have

2. Which structures and systems appeared deficient for Occupy Wall Street?

As the strategy evolved from quickly enrolling participants for instantaneous impact to

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Illustration 13.4

Structure, systems and saving childrens lives

This is a shocking case, and sadly is likely to have its equivalents in most developed countries.

1. List the advantages and disadvantages of the new structure and systems for childrens

services.

The advantages of the new system include:

2. What kinds of actions and initiatives might be appropriate in terms of the cultural systems

of childrens services?

The culture would have to change as well. Possible actions might include:

Illustration 13.5

Rogue banker or rogue bank

The career of Kweku Adoboli, initially such a successful management student, should intrigue

readers, many of whom may follow similar paths (though hopefully not to such a disastrous

end). Adoboli was obviously personally at fault, but UBS created a context where his type of

fraud was very likely to happen. The rogue bank in some sense created the rogue banker.

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1. In this account, what elements of UBSs systems appear to have been deficient, with regard

to Adoboli and more generally?

Section 13.3 highlights cultural systems, performance targeting systems and planning systems.

The UBS culture showed inadequate respect for legal and ethical conduct, as evidenced

2. What roles might the merger and growth strategy have played in the various failures at UBS?

Roles of merger and growth strategy: this rapid growth strategy had led to a focus on the

headline financial figures (size in terms of fees) at the expense of the structures and systems

Key Debate

Does structure follow strategy?

This illustration both reinforces the importance of structure and raises issues regarding the

adequacy of the Design Lens for understanding strategy (see Commentary on Part I).

Instructors Manual on the Web

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Video assignment

Wilmington and Mertapraxis

The video features Charles Brady who is the chief executive of the Wilmington Group and

David Hammond who is the principle consultant at Metapraxis. Wilmington is a UK-based

group of companies that has now expanded, via acquisitions, into an international business.

They provide information, training and other services to professional clients. Metapraxis is UK-

based consultancy specialising in business analysis and information management solutions for a

range of blue chip clients. The two executives discuss how the organisational structure has

evolved to meet the changing needs of their business.

1. Section 13.2 looks at different types of organisation structure and outlines the advantages

and disadvantages of each type. As Charles Brady explains, the structure of the Group has

changed as the nature of the business has changed from publishing trade journals to an

2. This question looks at the move to empowerment at Metapraxis and its advantages and

disadvantages. Empowerment became a big issue in the 1990s and is still an interesting area

of debate in management literature. At Metapraxis, David Hammond describes a process

that has seen individual managers given more responsibility and the power to make their

Assignments 13.1 and 13.2

Structural types

These assignments are designed to encourage students to become familiar with the basic

structural types as discussed in Section 13.2. More importantly, students need to understand the

advantages and disadvantages of the different structures and the circumstances in which they are

most likely to be appropriate (see Table 13.1). This is the way in which the discussion in the text

is organised, and students should be encouraged to test their real organisation against these

pure types of structure. It is important not to miss the following key points:

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Assignment 13.3

Strategy maps

The advantages of strategy maps include the wide range of perspectives or goals that can be

incorporated and the way that they are logically linked into a coherent whole. As the discussion

in Section 13.3.3 points out, there are still issues of inappropriate target levels and potentially

internal competition.

Assignment 13.4

Strategy style

Most students would opt for either the autonomy of financial control or the support of strategic

control: by contrast, strategic planning would be felt too smothering. The discussion in Section

Integrative assignment 13.5

Merger or acquisition

This assignment draws on the discussion of mergers and acquisitions in Section 10.3, the

concepts of related and unrelated diversification in Sections 7.2.1 and 7.3, as well as the various

structures discussed in Section 13.2 of this chapter and the styles in Section 13.3.1.

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Case Example

One Sony?

The Sony case should appeal because the companies products are well-known to students and

there is an interesting contrast to Samsung and Apple, two other iconic brands for them. The

new CEOs career  in the music business and video games design  may intrigue them too. It is

important for students to realise that multidivisional structures (Section 13.2.2) come in

different flavours, and can be reorganised radically within the same basic structural type.

1. Assess the pros and cons of Hirais structural changes.

The Goold and Campbell nine design tests (Chapter 13.2.6) may be helpful here,

particularly the market-advantage test, the parenting advantage test, the accountability test,

the specialised cultures test, the redundant hierarchy test and the difficult links test. In this

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Disadvantages:

Hirai will now have nine business group heads reporting to him, while he himself

manages the Home Entertainment (TVs) group, as against the six that his predecessor

had. This may be too much to handle.

Hirais slogan One Sony is ominously similar to Stringers failed Sony United. As clear

from the final comments, the Wall Street Journal appears to have little faith neither in the

new structure, nor (judging from the stock price) do the financial markets.

2. What other initiatives beyond structural change might be necessary in order to create One

Sony?

This question obviously invokes possible system (muscle) changes to go alongside the

structural (skeleton) changes that Hirai is introducing. Hirai hints at this in his quote from

the April 2012 investors meeting. The following may be particularly relevant: