Impact of organisational structure and culture

The success of any strategy can only be achieved if the organisation is efficient in terms of maintaining the activities that form part of the strategy implementation process. Such efficiency critically depends on how the organisational structure and culture are aligned with the strategic change that the company undergoes in the process of strategy implementation. Both organisational structure and culture are therefore frequently referred to as the strategic implementation variables (Katsioloudes, 2012).

Organisational structure and strategy implementation

Organisation chart

The analysis of organisational structure should start with visualising it by means of a chart. The following models of the organisational structure are the most typical:

• functional
• product
• geographical
• matrix
• network

See chapter 4 in Katsioloudes (2012) for an in-depth discussion of the above models.

An analysis of the organisational chart assists strategists in the identification of the strongest and weakest organisational elements, as well as the strongest and weakest links or relationships between them. This, in turn, suggests a route for their optimisation and realignment for a particular strategy.

Reorganisation as a strategy fit

Useful guidelines for establishing an organisational structure that would fit the strategy implementation process can be found in the work of Thompson, Gamble and Strickland (2009):

1. Identify the activities and procedures in the firm's value chain that play the most critical role in the implementation of a chosen strategy. These must be made the primary elements of the organisation's structure.
2. It is likely that a strategic activity cannot be completed as a whole by a single division or managed solely by its head. This, in fact, may be the case with the majority of strategic activities. In such a case, it is important to develop interdivisional relationships such that an appropriate level of coordination can be supported organisationally.
3. The resulting organisational structure should be centralised enough to ensure a level of authority necessary for the completion of key strategic activities. At the same time, the same structure should be decentralised enough to maintain a degree of divisional autonomy because overcentralisation can easily turn counterproductive for the organisation.
4. Analyse whether non-critical activities should still be done in-house or outsourced to a third party, so that the organisation's personnel can be better allocated for the completion of critical activities.

How strategy shapes structure

Read this article (Harvard Business Review – how strategy shapes structure, 2009) to learn more about how strategy shapes structure. It also considers the relevance of the blue ocean strategy framework.