Wharton Chapter 17

Managers and execs know organizations need to adapt to changing environmental conditions but as stated by the authors many successful organizations have trouble doing so. Is this a do as I say, not as I do mentality? Everyone knows they need to be able to adapt, but many can't.

Organizations are experimenting with new organizational forms. Many are resulting in flatter organizational charts as opposed to the traditional hierarchical structure.

Many emerging forms of organization are being tried, but there is no clear frontrunner for new type of structure. In fact, it is unlikely that one single form will dominate as the hierarchical form did for so long.

Forms of new structures:

Virtual Organization. Perhaps a traditional hierarchical structure but employees, suppliers, and customers are dispersed about a geographic area. My business is in talks with a newly formed virtual law firm to be their IT provider. However the technology to do this properly is quite expensive, more expensive than they had previously believed. Implementing a server hosted at a 3rd party co-location, IP phone systems, and network connectivity play key roles in this type of structure, and there is a significant cost of entry to get this going.

External Network Form:
I believe part of HP's business practices would qualify them as being an external network form. They handle their core competency but highly leverage outsourcing to handle many of the implementations and warranty claim services for small/medium businesses. They will contract with local IT providers and pay a flat rate to have the service performed on their behalf. Not exactly a textbook example, but in some part they know that end user service isn't in their core competency and outsource the work.

Internal Network Form
The internal network form kind of sounds like a franchise to me. Executives control company culture and handle much of the marketing and advertising that drives the brand as a whole, but you have the independant franchise owners who are in the field and able to make their own decisions as long as it is somewhat aligned with the franchiser's company goals. For example a McDonald's franchise can't just start selling hot dogs because they feel like it. However they can make some of their own promotions and pricing, and lay out the facility the way they see fit and have 100% control over their employees. They are very modular as recognized by the author.

Spin-Out Organizations
There have been quite a few Spin-Out organizations that have grown to be very successful. Micron is spinning out its imaging business named Aptima. This will still be mostly controlled by Micron, but will be a separate business entity. Spin-outs have tremendous potential and little liability to a company. As in Micron's case, they felt there would be more value in two businesses than having all of that technology under one business. Appleton was quoted as saying that Wall Street simply wasn't recognizing the value in the imaging business due to the performance of the DRAM market. Splitting off the imaging allows it to thrive on its own but still under the control of experienced managers and executives. Had a hard time finding any other info on this out there.

Ambidextrous Organization:
A company that creates and fosters an environment for an entity that would be a good candidate for a spin-out, but that will stay within the main entity of the company. Many larger established firms do this by creating consulting companies that will service organizations within the company as well as outside the company.
According to a Harvard Business Review article April 2004. "These organizations separate their new, exploratory units from their traditional, exploitative ones, allowing them to have different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level."
I think an important aspect of that is the idea of an exploratory unit. A large company may have all the necessary resources to help foster a newer entity, but for the most part want to leave it on its own to flourish and be successful or to be unsuccessful and dissolve back into the company. It is a way for a large immobile organization to create a new, nimble and proactive company while utilizing experienced internal executives.

Front-Back organizations:
Seen in some very customer focused organizations, like the medical field as an example from the book. Essentially the org chart is flipped upside down with the customers at the top along with the customer contacts, and then everyone else (supporting cast) behind.

Sense-and-Respond organization:
Apparently an organization that is ready to change strategies or tactics at the first sign of a market change. They have few long term plans and tend to change to stay with thier current customers regardless of where the market goes. I would say that most organizations try to be at at least somewhat a sense-andrespond organization. They want to be nimble and keep thier current customers since new customers are an expensive addition.